What do you think about focusing on a certain industry, not geography?

May 14, 2018

by an member in Los Mochis, Sinaloa, Mexiko

I am interested in setting up a search fund and I am currently working on several ideas/concept. It would be interesting to know the forum's opinion on focussing on targeting defined companies within a certain industry, but keep the geographic focus wider. How would this affect fund raising of the search fund and/or the acquisition funding?

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Reply by a searcher
from Harvard University in Omaha, NE, USA

If you want to focus on industry, I'd recommend casting as wide a geographic net as you can (e.g., national). If you're agnostic to industry, you can focus in a defined geography (e.g., regional). If the latter, it's important to have a wider aperture for sourcing, meaning if you use intermediaries, be national in your intermediary outreach. You'll find brokers or M&A advisers representing deals all over the country. As far as the impact on fundraising, that will be partly influenced by your approach--self-funded or sponsored. Furthermore, investors have their own preferences; therefore, you'll want to approach as many as you can to find alignment and fit.

Reply by a searcher
from Cornell University in Boston, MA, USA

Focusing on geography = I think I am the smartest guy in the room and can improve any company no matter what it does. Focused on industry = I know something about this industry (perhaps I worked in it, or studied it) and can bring something to the table other than just capital. I have expertise that is valuable. My investors were interested in me because I know food manufacturing machinery, have contacts in the industry, know what the trends are, who is important, etc.

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