Asset Heavy Businesses

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October 12, 2022

by a searcher from Northwestern University - Kellogg School of Management in Boston, MA, USA

I’m curious if anyone has used the search fund model to acquire lower growth, asset heavy businesses such as marinas with real estate, or even golf or sports complexes? How does the typical search fund investor look at these types of assets?

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Reply by a searcher
from University of Notre Dame in Charlotte, NC 28277, USA
I have looked at a couple low growth, asset-heavy businesses with no success. In both cases I could not get my financial models to generate enough cash to offset ongoing maintenance/CAPEX requirements (each asset cost nearly $1MM and was susceptible to breaking down peak season) - the investors I talk with express similar caution on such opportunities. If it were the right business with lower-risk assets I'm optimistic it could work.
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Reply by a searcher
from Universidad Panamericana in Guadalajara, Jalisco, Mexico
I am very interested in this kind of business; however, besides the struggles that Ryan mentions above, I have heard that it is very difficult to "sell" the idea to investors. It seems like investors highly prefer asset-light businesses.
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