How to structure distributions that's fair both to searcher and investor?

September 17, 2024
by a searcher from Northwestern University - Kellogg School of Management in Chicago, IL, USA
Can I steal someones time that has gone through a successful search on how they structured distributions that was both fair to searcher and investor? Love to hear different ways on how they thought about it or structured it.
from University of Michigan in Detroit, MI, USA
in Asheville, NC, USA
- 8-15% preferred return.
- 1x liquidation preference.
- 1.5x-2.5x step up.
Generally the quicker you can return investors initial invested capital the better terms you can get.
As for the actual “distributions” in your question, the above structure means that investors are made whole and then receive a preferred return before searchers see any part of the proceeds (other than a modest salary).
happy to answer questions on this if you have any.