Self-funded deal structures
January 18, 2019
by a searcher from Stanford University - Graduate School of Business in Palo Alto, CA, USA
I'm currently exploring the various search fund models and I'm curious to know how different people have gone about structuring their deals with investors (if applicable) after a self-funded search. Would anyone be willing to share what they've seen or what they personally worked out for their acquisition?
from INSEAD in 10 Rue de la Chasse, 77000 Melun, France
- If you're talking to institutional investors (Funds of search funds, serial investors in search funds), you'll get the same investment structure as a searcher in terms of hurdle IRRs, equity tranches etc, but you will allowed to bill all costs of your search (hence the importance of rigorous accounting and data collection); this means that you won't have had the searcher salary,
- If you're talking to a wider audience, you will still have a tough negotiation for the equity tranches (typically closer to a traditional PE-backed management package + preferred conditions for buying-out a significant share of the company); the important point here is that whatever the practices, all options are on the table if you have the right opportunity: great ones are very rare.
from Michigan State University in St. Louis, MO, USA