PPM for a traditional search fund?
October 07, 2023
by a searcher from Université Badji Mokhtar in Montreal, QC, Canada
Hi folks,
Has anyone here raised a traditional search fund or is in the process of doing so? I'd appreciate some help with the PPM.
Thanks,
Mohamed
from IESE Business School in Madrid, Spain
1) Background. Focus on why this is the right time for you to get into this way of life. As many, I spent a great deal of time understanding not only the business model but the daily life of a searcher by talking to many people (searchers, investors, suppliers, brokers, interns...) and getting to the rationale of why I want to do this now. Once you get there write a compelling story connecting the dots of your background.
2) PPM structure: keep it simple, don't overcomplicate things, as many have already said use the Stamford template and if needed add more relevant information in the appendix. I see as an advantage rather than a weakness having an accepted PPM template by investors.
3) Investment thesis: keep it simple, clear and coherent to your story, background and approach. The point is not to build a PhD thesis, it's to share with investors the way you plan to address the market. Feel comfortable, confident and open to discuss it.
Lastly, I wouldn't spend time getting to lots of PPMs from former/current searchers, while theres some value getting an understanding of recent trends of searchers that have raised funds in a given market, to me the most important thing is the relevance, coherence and consistency of the document and to me this is a consequence of the process that a searcher goes through when producing it. This may take longer or shorter depending on each searcher.
from Northwestern University in Stuttgart, Germany
the go-to-standard is the Stanford Search Fund primer. There's a recent post from the Goodwin Legal team that created the SFP PPM: https://www.goodwinlaw.com/en/insights/publications/2023/10/insights-privateequity-how-to-write-an-effective-search-fund-ppm
My additional pointers would be, take the standard, dare to (re)structure it as you see fit (based on your experience and common sense) and consider to add 1-2 industry and/or target assessments. Most important and echoing of all comments before me, use & leverage your TSF network. I found most of TSFs that have acquired are the most supportive ones.
Best of luck!
^redacted thanks for the tag!