$50MM to $100MM acquisition - GP/Searcher Structure

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by a searcher from Universitat Pompeu Fabra
in Manila, Metro Manila, Philippines

1yr ago

$50MM to $100MM acquisition - GP/Searcher Structure

Hello everyone,

I seek expertise in structuring bigger deals in the $8 to 10MM EBITDA range at a 2X EBITDA leverage.

The cap stack would be equity from LP and debt from a bank.

What do you think of this structure, and have you seen it before? Would this be considered an "independent sponsor" deal?

The searcher and the lead investor (family office) become GP in the deal, raise money from several LPs, and earn from carry.

Then, the searcher becomes part of the board and the CEO, receiving a salary plus a bonus based on performance. Eventually, after integrating, he replaces himself with another CEO but remains on the board as GP.

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reply by an investor 1yr ago
from Ivey Business School at Western University in Seoul, South Korea

Would the carried interesr payout structure mimic that of traditional search fund or would it be a 2/20 model where you and the GP would split the carry?

reply by a searcher 1yr ago
from Massachusetts Institute of Technology in Minneapolis, MN, USA

Yes, this sounds like an independent sponsor deal with the twist that the family office is part of the GP rather than one of the LPs. Is the thought that the searcher being able to tell potential targets that they have a lead investor locked in during the process is worth a share of the carry or would the family office add value in some other way (e.g. handling the fundraising, supporting deal flow, providing advice)?