Moving to a new location prior to starting a search
May 23, 2020
by a searcher from Duke University - The Fuqua School of Business in Mountain View, CA, USA
Hi all,
I currently live in a high COL (SF Bay Area) and was considering moving to a geography with a lower COL prior to starting my search.
Has anyone done anything similar?
Would love to hear any thoughts or feedback.
from IESE Business School in Green Bay, WI, USA
1.) A personal support network. Entrepreneurship in general, and search funds more specifically, can be a lonely, isolating, up-and-down experience. I wanted to be close to friends and family who could be emotionally supportive (including to my wife and children).
A few other reasons in no particular order:
- Low cost of living. This is always comparative, but in general my search budget can stretch further here than in many other big cities.
- A place I could imagine myself living, working, and owning a business long-term. While I'm DEFINITELY geographically agnostic, the statistics are pretty clear that searchers have a higher likelihood of acquiring a company within or near their "home" search location. Which means I also wanted that home market to be reasonably big enough to potentially be a source of decent opportunities too, so...
- An attractive business environment. Minneapolis is home to many international headquarters across a variety of sectors, which means that it also has many SMEs that support those businesses. Plus universities, R&D, a broker/PE/M&A/IB community, diverse population, etc.
- A decent airport, and a location in proximity to that airport, that could get me anywhere in the country fairly easily for face-to-face meetings with sellers, diligence, etc.
- A place I wanted to live short-term (to juxtapose the long-term answer). I knew I'd be happy to live here for 6 months or 36 months, and it wouldn't be that hard to get settled in quickly (not a "complicated" place to live).
While I'm early in my search and COVID has made the airport unnecessary for now, I think the others have more or less played out to my expectations.
from University of Pennsylvania
Just be aware that deal flow will be much lower - maybe only one or two real opportunities a day. Could of course find more by soliciting in the area but we also wanted to close on something quick so felt it best to look at businesses already ready to sell. Being local probably helped close the deal as we had some in-person meetings with seller and broker that were helpful
I think being self funded helped a lot to let us take this approach and we also knew that there would be potential deal tradeoffs. For example, there were some concessions we might have demanded from the seller but we felt it wasn't worth the discount versus potentially having seller walk away from the deal. Just knowing there is limited deal flow means you have to be more comfortable you won't find the "perfect" deal - but that might be helpful in the end.