Success during search phase: traditional searchers vs self-funded ones

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November 07, 2021

by an investor from University of Colorado at Boulder in Horsham, PA, USA

From what I've seen, traditional searchers usually have more success finding companies. Partly, it's the support they get from their investors. Partly, it's the fact they are receiving a salary and are 100% (usually more than a 100% :) focused on the search and nothing else, with the full buy-in from their spouses. And they are under the gun to deliver in about two years, after which the money runs out.

I've had a lot more data points from traditional searchers, since they are my focus (and to some extent from very experienced, multi-deal independent sponsors), so I could be wrong. Curious what your experience has been...

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Reply by an investor
from University of Pennsylvania in New York, NY, USA
I agree with the general premise of the original post, however, the better question is how the two do after acquisition. My belief is a traditional searcher is generally under more pressure to execute the deal. He or she may execute on a deal they shouldn’t because they are reaching end of fund life. I have seen of evidence of similar behavior in traditional private equity funds.
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Reply by an investor
from University of Pennsylvania in Washington, DC, USA
I think it's hard to quantify and then compare as so many different types of self-funded searchers - full-time vs part-time, recent MBA vs mid-careers, very confined geographical constraint (say 1-2 hour) vs broader search, size of deal. Probably the best proxy would be full-time self-funded search looking at $5-8M EV vs full-time traditional search.
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