Search Fund How-To
I had heard of the search fund concept, but beyond the obvious challenges, was always curious about how one would get started and what exactly the process entails. Luckily, HBS posted videos from panels that took place at last year’s Search Fund Entrepreneurs Conference.
For those that aren’t familiar with what a search fund is. It’s essentially entrepreneurship through acquisition. The basic steps are:
1) Small “search” team of entrepreneurs rounds up a dozen investors who will front some cash (about $25k each give or take) to cover the cost of the search team finding a great business to acquire.
2) Once the search team finds such an investment (this can take a couple of years) the original investors can invest at a discount.
3) Assuming the deal closes, the search team then takes over the operations of the company and grows it.
4) PROFIT.. =)
If you have a couple of hours, these videos are definitely worth watching even if you have no desire to be involved in a search fund. I learned countless practical lessons on how to create and manage proprietary deal flow, negotiate, deal with accountants and lawyers, obtain debt financing, and even how to successfully lead and manage a growing organization.
