Typical UK search fund investment structure

July 05, 2021

by a searcher from INSEAD in London, UK

Seeking guidance on typical investment structures in the UK please. I have seen plenty of content on US but would like to know if/how much this differs in the UK context. Would appreciate a chat ideally or comments on a few questions, specifically:

1. How much tends to be equity vs debt vs seller/other sources
2. The split of redeemable preferred stock to non-redeemable participating preferred stock
3. Common coupon rate on the redeemable portion
4. Typical manager equity in cases of a partnered search
5. Debt interest rates

An example acquisition projection model with UK context will top it off!!

Thank you,
Emmanuel

Reply by a searcher
from North Carolina State University in Pennsylvania, USA

Great questions, Emmanuel. UK search fund structures are broadly similar to the U.S. but tend to involve lower debt ratios (30–50%) and more conservative terms from lenders. Preferred equity (often redeemable with an 8–10% coupon) is common, with manager equity ranging from 20–30% in partnered searches ●‿●

Reply by an admin
from Stanford University in Honolulu, HI, USA

Hi, ^redacted‌: Please join us for the UK searcher meetup on Friday with search fund attorney Geraint LLoyd. He may be able to shed light on your question as well. Warmly, Karen

+3 more replies.

Join the discussion