WHAT IS A SEARCH FUND?
“A Search Fund is a ﬁnancial vehicle typically created by one or two entrepreneurial, top-tier MBA graduates who raise money from a group of advising investors to support their efforts to locate, acquire, and lead a privately held company over the medium to long-term”
Source: Stanford GSB Search Fund study
HOW DO SEARCH FUNDS WORK?
2 to 4 months
Searchers first raise a small pool of search capital of $400-720k from 10-20 investors to fund expenses associated with their search, and give investors the right to participate in a potential acquisition.
4 to 7+ years
Searchers usually focus on organic growth, utilizing various operating levers, and operate their business for several years, providing meaningful value to their investors and themselves.
Manage & Grow
Up to 24 months
Once searchers identify
a target, they present the deal to their investor group and solicit a second round of funding, typically $5-15mm.
Search & Acquire
3 to 6 months
Searchers first return to their investors their invested capital plus a preferred return, and then share the upside with their investors (carried interest).