Is it possible to have your Search Fund in one country (Spain) and your acquisition in another (France)?
July 04, 2023
by a searcher from IE Business School in Paris, France
Hello,
I'd like to know if it's possible to create your search company in Spain, but search and acquire a company in France? Why do that? Basically it would save a 100k, I live in Barcelona (very well connected to France) and I'm French :)
Do you see any issue in doing that?
Thanks for your advice!
from INSEAD in Madrid, Spain
Out of the >100 search funds Istria has invested, three that followed that approach in Europe eventually failed to acquire a company (while portfolio success ratio is >80% so far). There were several reasons but this one was clearly among them. Another one tried an industry-focused, multi-country search and was successful, but that's different from what I think you're planning.
- Not sure where the 100k in savings come from (searcher's salary due to cost of living and/or less taxes?), but other costs will likely be higher (e.g. travel).
- Search will be less efficient. You'll have less flexibility to move around France and visit owners, also to network with industry experts, etc. Managing interns remotely is doable but frequent in person contact is highly recommendable.
- Closing an acquisition will be trickier with the HoldCo in Spain and the target in France. Or you may wind down the entity in Spain and create another one in France for the deal, transferring investors rights, etc. Higher legal costs in any case. This may also complicate things around bank financing.
In short: financially, I don't see a great benefit in having the entity in Spain; operationally, it's a disadvantage to be based in a different country.
from Stanford University in Paris, France