Cliff Nelson Survey

 Cliff Nelson, Selection Capital

Selection Capital, Current Searcher, Traditional Search

Survey completed September 17, 2020.

Why did you choose your model? Would you make the same choice again?

Yes. I chose the traditional funded search model for two reasons. First, as a practical matter, I wanted to have at least some income to cover living expenses (and student loan payments) while searching. Second, more importantly, I valued the opportunity to build a deep bench of people with experience that would supplement my own. Smart people with different opinions voting with their dollars should lead to a better outcome!

Are you searching with a partner? If so, why did you choose them? How did you find them? If not, why did you choose to search solo?

No. The decision to have a partner is up there with marriage. I talked to a couple of failed search partnerships that didn’t close a transaction because they weren’t as closely aligned as they thought on lifestyle. I do have a few former classmates and co-workers I would have loved to search with, but they were otherwise occupied. The big drawbacks of not having a partner are (1) experience gaps, (2) motivation, and (3) emotional support. If going solo, you need a way to mitigate those.

When is the right time to start speaking with investors? How did you select your search and/or acquisition investors?

As early as possible. I wish I would have built relationships sooner and gotten to know more investors before raising. However, remember that you will be judged on even early informational interviews. Other than the obvious that investors need to have capital and a track record either investing in or running lower middle market businesses, I wanted to build a “tribe of mentors.” I selected for more engaged investors that had a mix of experience sourcing, closing deals, and operating companies.

Did you get an MBA before searching? If so, where and why?

Yes, Chicago Booth. I knew I wanted to be an entrepreneur but had no idea the various ways to do so. Booth gave me the opportunity to formalize what I had learned on the job after undergrad and to explore various options for being involved in the entrepreneurial ecosystem (employee at a PE-backed company, investing, and search).

What is your work experience prior to searching?

8 years total – 3 years consulting, 1.5 years PE-backed operations, 3.5 years PE/VC investing

What industries and sizes of companies are you pursuing?

B2B Services, $1-5mn EBITDA.

Are you doing a geographically focused search? If so, where?

No, anywhere in the US is fair game.

How long have you been searching?

1.5 months.

What systems do you use? (CRM, Email Manager, etc)

Streak CRM, GMass, Rocket Reach, Upwork.

How do you organize your day?

Still working on the right rhythm. My goal is to have the workdays booked with as many owner calls as possible and to use early morning/evening to check intern work and queue up emails. I have a team meeting with interns on Monday and 1:1s on Friday.

How do you identify prospects to acquire? Do you use only brokers, only direct outreach, or both?

Vast majority (90%+) of time so far has been direct outreach, but I’m working to build out the broker channel, primarily to identify new industries and to maintain dealflow between intern classes.

Approximately how many direct outreach calls and emails have you made to owners?


How do you find company lists?

Industry associations, conference attendees, B2B review websites, LinkedIn, Upwork.

Do you subscribe to broker deal lists? Which ones?

Yes – Generational Equity, The Firm, Everingham & Kerr, and a bunch of others.

Do you use interns? If so, how many? What do you have them do?

Yes – I have 8 currently. 6 focused on list building and email customization for proprietary outreach, 2 focused on contacting intermediaries and reviewing broker deals.

Approximately how many deals have you reviewed?


How many companies have you gotten to the LOI stage with? How long before your first one?

One submitted LOI ~1 month after formally launching the search.

What has been the most challenging part of your search? What was harder/easier than you expected?

Most challenging – Maintaining focus. I initially tried contacting targets in too many industries at once and have now narrowed to 2-3 at a time. As you find adjacencies and new ideas from broker deals, it’s important to maintain a list of future industries/opportunities/contacts but not to get distracted. Easier than expected – Getting a feel for how my investors evaluate deals. I’ve tried to get opportunities in front of them early and often, and I’m really happy with how well aligned we are on opportunities. I credit this to the conversations we had during the fundraising process.

What articles, books, and resources were most helpful to you in preparing to search?

Other searchers are by far the most valuable resource. I talked with ~30 before starting to raise and have now lost count. I still get a lot of value out of talking to other searchers for industry ideas, motivation, emotional support, etc. I also read books like the HBR guide, Buy Then Build, Here’s the Deal. Searchfunder was helpful for finding contacts (including investors) that otherwise may not have been on my list.

What do you wish you knew prior to searching?

Not a specific piece of information, but I wish I would have interned for a searcher and/or search fund acquired business. It’s hard to know if you’ll like the search process, types of businesses, management challenges, etc. until you’re in it.

What single piece of advice would you share with prospective searchers?

If it was easy, more people would do it. There are fewer active searchers than pro baseball players. I’m sure many (if not all) MLB players had people discourage them from their dream due to long odds of success – the ones who make it are the ones that didn’t listen. Search odds are actually pretty good. Assuming you can raise the capital, your odds of becoming a CEO are better than a coin toss. Keep pushing!


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