What is a search fund and its process?

Below you will find a step-by-step process per how a search fund works and how we plan to operate

Stage 1: Fundraise for Search Capital (1-3 months)

Stage 2: Source and Evaluate Opportunities (1-24 months)

Stage 1: Fundraise for Search Capital (1-3 months)

Stage 3: Finance and Close a Transaction (2-6 months)

Stage 5: Exit the Business (4-6 months)

Search fund Duration

2 years approximate

TRADITIONAL SEARCH

Industry and geographically agnostic in the U.S.

Steps

1

Stage 1: Fundraise for Search Capital (1-3 months)
The journey begins with raising capital to finance the search for a suitable acquisition target. Entrepreneurs, often referred to as searchers, seek funding from a group of investors who are willing to provide the initial capital necessary for the search phase. This stage involves crafting a compelling pitch, demonstrating the searcher’s capabilities, and securing commitments from investors.

2

Stage 2: Source and Evaluate Opportunities (1-24 months)

Once the search capital is secured, the searcher embarks on an extensive process to identify and evaluate potential acquisition targets. This stage involves conducting market research, networking, and leveraging professional relationships to uncover businesses that meet specific criteria. The evaluation process includes due diligence to assess the viability and growth potential of these businesses.

3

Stage 3: Finance and Close a Transaction (2-6 months)

After identifying a suitable target, the next step is to secure the necessary financing to acquire the business. This typically involves raising acquisition capital from investors, negotiating terms, and structuring the deal. The transaction must be meticulously planned and executed, including legal, financial, and operational considerations to ensure a smooth transition.

4

Stage 4: Operate the Business (5-7 years)

Once the acquisition is complete, the searcher transitions into the role of operator, taking on the day-to-day management of the business. The goal during this stage is to implement growth strategies, improve operations, and enhance the overall value of the company. This period typically lasts several years and requires a strong focus on execution and performance.

5

Stage 5: Exit the Business (4-6 months)

The final stage involves planning and executing the exit strategy. This can include selling the business to a strategic buyer, merging with another company, or other exit routes that maximize investor returns. The exit process requires careful preparation and timing to achieve the best possible outcome for both the searcher and the investors.

Investors play a crucial role throughout the search fund process, providing not only capital but also mentorship, industry expertise, and strategic guidance to help the searcher succeed at each stage.

How can we assist

Contact Gonzalo Munoz at [email protected] or call at 713-299-2295.

713-299-2295