What typically happens to funds if a search is completed before two years?
If a search is completed and a suitable business is acquired before two years, what typically happens to the remaining funds?
Post a question, deal, job, etc...
Make a post...
by a searcher
from Massachusetts Institute of Technology - MIT Sloan School of Management
in Boston, MA, USA
in Boston, MA, USA
2yrs ago
Share
0 Likes
147 Views
Loading...
reply
by a searcher
2yrs ago
from Instituto Tecnológico y de Estudios Superiores de Monterrey (ITESM) in Monterrey, Nuevo Leon, Mexico
from Instituto Tecnológico y de Estudios Superiores de Monterrey (ITESM) in Monterrey, Nuevo Leon, Mexico
Can't recall where I read it, but I saw that you can typically apply the funds to your acquisition capital. That way your basis is slightly lower and therefore you'd need to return slightly less to hit your return targets. (Of course, that capital is stepped up by 50%, so better to be precise)
reply
by a searcher
2yrs ago
from Harvard University in Piedmont, CA, USA
from Harvard University in Piedmont, CA, USA
Sam is right - money rolls into the acquisition. Worth noting that the full stepup applies regardless of how much capital is used.
For example, if you raise $500k in search capital, you have $250k in stepup capital regardless of whether you spend $1 or $500k of the search capital.
For example, if you raise $500k in search capital, you have $250k in stepup capital regardless of whether you spend $1 or $500k of the search capital.
More on Searchfunder
Loading...