Self-Funded Search vs. Traditional Search Funds

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April 18, 2022

by a searcher from Brown University in San Francisco, CA, USA

The searcher podcast Acquiring Minds staged a debate last week about the merits of self-funded search vs. traditional search funds, with 2 passionate advocates for each model: redacted‌ & redacted‌.

A lot of ground was covered in what was a really substantive (and heated!) debate.

Enjoy:


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Reply by a searcher
from University of Calgary in Calgary, AB, Canada
Great episode last week Will. As Evercreek, we are two mid career professionals with backgrounds in IB/PE/and opcos in Western Canada, Originally started out looking to raise a SME buyout fund with a custom structure underpinned by a deal we concurrently negotiated to LOI, couldn't get enough interest to see a first close happening for our deal, so pivoted to single deal self funded search after connecting with Mario Nigro at Stikeman. In our experience, finding investors through our internal "rolodex" that will meaningfully engage let alone consider terms starting at standard search was a challenge. The individuals we connected with through Mario that are active in the SF/ETA space were on a different level - no need to explain the terms as we were seeking 10/10/10, great Q&A and feedback. Unfortunately for us the target was office furniture distribution and manufacturing, which wasn't resonating given the uncertainty post pandemic despite the solid history, profitability and reasonable valuation. Tradeoffs well laid out in the podcast, in hindsight, having some income and additional viewpoints around the table would have been welcome.
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Reply by a searcher
from North Carolina State University in Sykesville, MD 21784, USA
Another great episode. Will, thank you for brining up the point about mid-career searchers being closed out of traditional search. Which is my particular situation, I don't think I could raise a search fund if I tried, but am easily able to self-funded search.

To me, both ways of searching are remarkable even if both have downsides, they are still better than a startup, working in corporate, or many other career paths.

The passion was evident, but to me, the data is still unclear. Both data sets are relatively small and the self funded side is unpublished. I am no statistician, but even the traditional search data seems to be in the realm of law of small numbers.
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