Search Fund Good Reads
Search funds, a concept that originated in the United States 40 years ago, represent a relatively new practice tailored for small-cap acquisitions. This model allows one or two first-time buyers to raise funds to search for a target company.
In France, there are about twenty to twenty-five 'searchers', individuals who seek the 'perfect company' that meets specific financial and strategic criteria not understood by outsiders. These searchers aim to acquire companies, provided the current owner agrees, with hopes of fostering their growth and fulfilling their entrepreneurial ambitions.
The text discusses an acquisition method known as search funds, which was previously unfamiliar to the author until a subscriber mentioned it. The author expresses skepticism about this model, highlighting concerns that potential acquirers and investors should note. The concept involves an entrepreneur, known as the 'searcher', gathering investors to finance the acquisition of a company while also paying the entrepreneur during their search.
Search funds are a method for an individual to acquire a small to medium enterprise (SME) through financing from a group of investors. This innovative model has thrived in the United States, with over 400 search funds raising a total of $1.4 billion.
Search Funds are an innovative financing method that has emerged for those looking to acquire existing businesses. Originating from the United States, this model has gained global traction, offering a novel approach to business acquisition. A Search Fund involves collaboration between entrepreneurs and investors where entrepreneurs seek to acquire an existing company instead of starting a new one from scratch.
Search funds have seen significant growth over the past two years, benefiting both investors and entrepreneurs known as searchers. This growth is highlighted in the recent biennial study by the Center for Entrepreneurial Studies at Stanford Graduate School of Business, which monitors search fund activities. Search funds, which allow entrepreneurs to secure funding and mentorship to acquire and manage privately held companies, were first conceptualized by Stanford GSB professor H. Irving Grousbeck in 1984.
Family businesses face various obstacles during the succession process, as highlighted by the Annual Observatory of Family Businesses. The transition of a business to the next generation can be fraught with tension, particularly when determining which child is most capable of taking over. Various strategies exist for this transmission, which may involve selling or donating the business, or a blend of both. The psychological preparation of the potential successor and their assessment of necessary skills are crucial components of a successful transition.