[self-funded] Brokers showing hesitation towards club deals

Member resources:

Frequent asked questions:

What is Searchfunder.com?

Searchfunder.com is an online community of searchers, investors, lenders, brokers and other professionals. Over 80% of those involved in searchfunds maintain a Searchfunder account to help them network, hire, and mentor others.

What are the benefits of membership?

In addition to accessing the most active online network of business buyers, Searchfunder licenses research that is simply not cost effective for individuals. Access over 15,000 industry reports and 50,000 transaction financials. You also get monthly credits for contact information for your company sourcing campaign with the option to purchase more at drastically discounted rates. Searchfunder has pre-purchased access from these data providers in order to empower individual buyers and to help searchers level the playing field versus private equity.

Do you have deals?

While we are primarily a buy-side network, we do have hundreds of brokers that regularly post deals to the community.

Can I find an internship on Searchfunder?

Absolutely! We have the industry's largest intern job board. If you are considering a search, the first step is to help another business buyer so you can hit the ground running.

What does it cost?

Searchfunder is a subscription service. We offer flexible monthly, annual and lifetime memberships.

Monthly

$79 / month

Annual

$19 / month

Lifetime

$432 / once

Those who maintain an account with us for over 4 continuous years are permanently added to the community without the need for a membership.

Do I need an MBA to join?

While a large number of our members come from dedicated programs at Harvard Business School, Stanford GSB, Chicago Booth, and other top programs, searching is no longer reserved for the elite. With the current abundance of dry powder in private equity, and an increasing number of business owners reaching retirement age, good deals rarely go unfunded.

Post a question, deal, job, etc...

Make a post...

Complete registration to post.

by a searcher from Katholieke Universiteit Leuven
in Berlijn, Duitsland

5yrs ago

[self-funded] Brokers showing hesitation towards club deals

Brokers are showing to be very sceptical to club deals and we would like to understand strategies to mitigate this issue
- Deal certainty has killed a few projects and reduced deal flow significantly
- Are there any common instruments used to battle this (i.e. LOI?)

1 Like

205 Views

reply by an intermediary 5yrs ago
from Wake Forest University in Winston-Salem, NC, USA

Agree. A club (multiple investor) deal just multiplies the potential risk that a transaction won't close because an investor pulls out, particularly if the club has not been formed yet. On the other hand, if you can demonstrate their commitment through letters of support/commitment, you might be able to turn it around and make it a positive (more capital available, more expertise to guide/advise, if one of four backs out, the other three can step up, etc.).

reply by a searcher 5yrs ago
from Katholieke Universiteit Leuven in Berlijn, Duitsland

You guys are right. Brokers do indeed see a club deal as something complex where a lot can go wrong. When comparing to a normal funded search the risk perception is higher as the investors for the classic fund did make a commitment up front. This is still not the same as Assets Under Management what some brokers are asking for.

From our end the key reason to pursue this strategy is that we find the search fund startup capital to be very expensive. Raising 200k for a 2 person search and then giving a 50% discount when you convert it into the companies equity is super expensive (IMO). In the EU you can easily reduce living expenses to 40k p.a. and make enough with consulting to cover any DD costs.

Therefor we try and pursue club deals where investors come in at the same valuation as us.