How narrow is your investment thesis?

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July 17, 2022

by a searcher in Boston, MA, USA

Hi all, preparing for a search, and one piece I'm interested in feedback on: how specific is/was your thesis at the start of your search? Ie, some folks in the community seem to have narrowly defined industry targets or company profiles, allowing them to go deeper in that space, but likely also meaning the search could take longer or they could run out of acquisition targets before finding the right fit. A broader search obviously means more potential targets, but less opportunity to become deeply knowledgeable or build a network within a specific industry. Thoughts on best practices here?

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commentor profile
Reply by a searcher
from INSEAD in Madrid, Spain
You're going to be acquiring a company you'll be running for quite a few years, and ultimately this is about self realization, so if there's a theme you're passionate about, go for it!. Furthermore, if there's a sector/deal profile/situation where you or your investors could bring value beyond money, I'd suggest you focus on that, as you'll find it easier to differentiate and feel more comfortable with the deal. Being a pure generalist only makes sense to me if you're the only searcher in Greenland...
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Reply by a searcher
from The University of Chicago in London, UK
IT depends. If you are passionate about any particular industry then, you may consider it being narrow. Also, have any spoken to any potential investors? What do they like - narrow or broad search? Also, it depends on your personality. If you like to be up to speed quickly, then a narrow search or very focussed search will help to understand the industry quickly.
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