Standardizing self-funded search investor terms

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 an investor
in Austin, TX, USA

1yr ago

Standardizing self-funded search investor terms

If you’re a self-funded search investor, you might be interested in participating in an initiative that a few dozen of us other self-funded investors are working on.

By way of background, I manage redacted, a group of over 100 SMB equity investors (individuals, family offices, and funds). We review pitches from a couple of searchers or independent sponsors each month.

A recent initiative of our group has been to work on a standard set of terms that self-funded deals can work off of (much like how angel investing has the redacted, which is a free, publicly available legal document for structuring seed investments that founders and investors both work off because they agree it's fair).

The capital raising process would be much simpler if there were a free, fair, and publicly available term sheet for self-funded preferred equity (that investors and searchers both thought was fair). Investors wouldn't have to worry whether key economic terms (preferred return, waterfall, etc.) and governance terms (limits on related-party transactions, tag-along rights, etc.) would be included in the deal. The focus is on a structure with blanks as opposed to actual numbers (e.g., "preferred return of [ ]%" as opposed to "preferred return of 10%").

We want to involve as many investors (and eventually searchers) as possible to produce a document that is considered truly fair and comprehensive.

Current Draft

The current draft of our work is in a Google Doc here: redacted.

Next Steps

If you’d like to be kept in the loop on this process, please DM me your email or contact me at redacted.

If you have any opinions or questions about the above term sheet, please reply to this post or email me directly. We want as much investor input as possible!

About Us

At redacted, we review pitches from a couple of searchers or independent sponsors each month. If you’re an accredited investor interested in joining us to look at deals, please fill out this redacted. Also, if you have any questions about the group, please feel free to DM me here or email me at redacted.

16 Likes

1,160 Views

reply by a searcher 1yr ago
from Indiana University, Bloomington/Indianapolis in Chicago, IL, USA

Agreed here that standardization runs a bit counter to the spirit of why self-funded searchers embark upon this path in the first place. I've been an investor for the last 15 years across the spectrum: in self-funded searchers, dozens of pre-seed through series D investments, and also traditional buyouts for $bn+ PE fund. From those experiences - and having experience with market terms for equity investors - I think there are a number of items in the draft template that will potentially be considered non-starters for any sophisticated searcher who understands investing norms and has experience doing buyouts. Having said that, I do like the idea of creating a template and having standard deal categories for addressing positions (I believe the substance of those positions should remain flexible and a function of the deal, the searcher, and the opportunity!).

reply by a searcher 1yr ago
from Dartmouth College in Hanover, NH, USA

I understand some of the skepticism but as Michael pointed out - the standardization would be much the same way that Y Combinator has effectively standardized SAFEs for venture investments. As someone who has raised venture (in priced rounds and SAFEs) - that standardization saved me an enormous amount of headache and high 5-figures in legal fees.

Furthermore - adoption of the YC standard has led to broader adoption of more entrepreneur friendly terms in the VC world. I'd hope that this could be done here.