SELF-FUNDED SEARCH VS. FUNDED SEARCH W/ RE-FINANCE OPTION?
I have been looking at a self-funded search for purposes of greater equity and control, but some obvious limitations to this are access to lower deal sizes (buying job vs. company), financing my own search via savings, potential lack of advisors, etc.
The funded search helps with these but at the cost of relinquishing significant equity.
I've been wondering if, perhaps, the best of both worlds would be to have a funded search but re-finance investor equity via debt (and cash) 3-5 years in? This would allow one to de-risk the investment because:
- You'd start with a larger business with stronger margins
- Get 3-5 years in before raising significant debt making it easier to convince the banks
- Not take on the risk of significant debt on Day 0 based solely on a due diligence
Keen to hear your thoughts and experiences with taking this route/ rationale?