9 Key Characteristics of the top 25 High Performing Search Fund Companies

Summary of a presentation of a great research project by TTCER, Austin Yoder, Gerald Risk, Sara Rosenthal, & Will Thorndike - presented at Stanford search conference of the top 25 search companies of all time- full study to be released publicly at a later date

1 - Conventional search criteria are even more important than we thought (industry tail winds, recurring revenue, growth rate)

2 - Expect adversity. 90% of companies faced major adversity in the journey. It's not straight up to the right. · 3 - Consistent and Predictable Trajectories of Growth. Years 1-2 are learning and building the machine. Years 3+ are scaling the machine (mgmt team, sales process, culture)
4 - Adjacencies often proved to be key growth levers. Adjacencies in type of customer, product, & market
5 - Leaders shared key traits across varied personality types. Tenacity, creativity, coachability, humility, & analytical skills.
6 - Time is the scarcest resource, with significant time spent on talent mgmt. Actively focus on the 2-3 important items will simply result in better outcomes.
7 - High performing cultures are built with intention. Intense/authentic, disciplined performance, prioritizing customer, compulsive fixation on improvement and profitable growth. · 8 - Capital allocation is a simple but strategic discipline. 100% invested in organic growth. 48% used acquisitions. 48% used share repurchases. First 3-4 years focusing on organic growth & serving debt. Years 5+ - dividend recap, acquisition, repurchase.
9 - Bodies in motion, Stay in motion. Great companies kept on winning. Thus you should hold your winners even longer. Not a single buyer (PE / strategic) lost money buying a HPC. Average another 3.5X MOIC after HPC sold.

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