The best brutally honest search advice I ever received

September 16, 2020

by a searcher from Northwestern University - Kellogg School of Management in Los Gatos, CA, USA

4 years ago this month, I set out to buy a business with a business partner. I was 4 years post MBA and had a few great generalist experiences under my belt. A long-time friend who'd followed the independent sponsor path after a stint in PE sent me some resources and we initially modeled ourselves based on that. One PE investor friend of ours read our initial pitch, and after being visibly uncomfortable for a few minutes, came back with the following observation that rocked my world.

Ok, this all makes sense and seems like it could work... (awkward pause) ... so you're just a bad private equity group? (awkward pause) ... You know... (stutter) you don't have any money, operating history, relevant industry experience, successful past deals, or adult supervision. You've got some operating and management experience, but not a ton. Your deal criteria look identical to what all the lower middle market PE firms and the most reputable independent sponsors are looking for. You guys are smart, but I'm really struggling to figure out what your advantage is with this strategy.

Ouch. It hurt most because he was spot on. So we pivoted hard toward true small business acquisitions, and haven't looked back. The rest of the story-to-date is well-documented on Searchfunder (though I don't think I ever shared this part before), and in a few different podcasts.

The best way to connect with me is to join my ETA network at operators.mn.co

Reply by a searcher
from Cornell University in Vancouver, BC, Canada

^redacted‌, thank you for sharing your story! As a recent MBA grad, I was guilty of the "go big or go home" mentality initially. However, my early search experience has propelled me to broaden my search criteria to consider smaller deals. If I have two to three decades ahead to keep building, why not start small and get some experience of working in the business under my belt first? Later on, I can pursue expansion through roll-ups/add-ons so that I can work on the business. Search on!

Reply by a searcher
from Creighton University in Omaha, NE, USA

Totally agreed. Objectively, the whole search fund concept is audacious/arrogant and sometimes obnoxious. That's not a criticism - a search fund isn't as audacious as those who launch a startups - and I'm guilty of doing both. If climbing the corporate ladder is the traditional career path, then a search fund must be the "Karen" of all career paths; cutting ahead of everyone else, and not only demanding to speak to the manager, but to become the manager! :-)

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