Current Searcher, Self-Funded
Survey completed September 18, 2020.
Why did you choose your model? Would you make the same choice again?
Flexibility. I’m not restricted by investor expectations (i.e. industry focused, or nationwide finding simply the best opportunity under the sun). Self-funding also allows me to aim for companies that fall below the lower-middle market threshold. I haven’t completed the search, but if I’m successful I’d actually consider a funded search in the future. Right now, I’m more concerned with finding a business that feels right. I want there to be a great fit and I want to own/operate the company.
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?
When is the right time to start speaking with investors? How did you select your search and/or acquisition investors?
Actively seeking investors for diligence and acquisition phases
Did you get an MBA before searching? If so, where and why?
What is your work experience prior to searching?
11 years post BS in Mechanical Engineering
What industries and sizes of companies are you pursuing?
Range of sub-industries focused on industrial services
Are you doing a geographically focused search? If so, where?
Loosely geographical, western US
How long have you been searching?
How do you organize your day?
Standard schedule and checklist
Do you use only brokers, only direct outreach, or both?
Both, 80% broker / 20% focused proprietary outreach
Approximately how many direct outreach calls and emails have you made to owners?
How do you find company lists?
Internet and contact lists
Do you subscribe to broker deal lists? Which ones?
Yes, several. Most big brokers have an emailer they put out
Do you use interns? If so, how many? What do you have them do?
Approximately how many deals have you reviewed?
How many companies have you gotten to the LOI stage with? How long before your first one?
1, I was working full time and the deal presented itself to me. Took about 6 months to get there
What has been the most challenging part of your search? What was harder/easier than you expected?
Finding acquisition partners, committed capital. Let’s start with partnership. A self-funded searcher doesn’t have committed partnership. I don’t owe a right of first refusal to any investor or syndicate. While this can be advantageous, it presents a challenge because most investors want searchers to share their deals with them, but they’re completely uncommitted. Another challenge is my inexperience. I’ve never worked an LBO, so learning the nuances of it is higher risk than if I had a team of support behind me.
Committed capital – I’m working right now to start a trust where some wealthy friends can invest in units, just like a search fund, except the trust will be held solely for due diligence costs. With that, it’s always a challenge to raise funds and find terms that everyone can agree on. I’ve been surprised at who is willing to put money on the table, but until I launch full-time I won’t see the committed funds and I strongly believe people that express commitment will back out when real money has to go on the table.
What articles, books, and resources were most helpful to you in preparing to search?
Search Fund Primer, HBR Guide, and Searchfunder community
What do you wish you knew prior to searching?
Self-funded acquisition capital structures with investor partners. What does that look like.
What single piece of advice would you share with prospective searchers?
Hang in there! – Searching has been challenging. It takes sustained effort to learn about it. Everyday I’m confronted with a new shortcoming, or I find a question I can’t easily answer. I believe in Walker Diebel’s book, he states that most people that start a search won’t acquire a business. Knowing that, and knowing that I’m committed is enough for me, but some days I need a reminder that this is a multi-year effort. Just gotta keep moving one foot after the next.