Power Pal

From my last post about search funds , I took a closer look at some of the documents on the Stanford CES website .  Specifically, I read through a 2007 study on the state of search funds.  It covered the stages search funds go through and typical characteristics at each stage - profiles of principals, typical fund and acquisition sizes, range of returns for the funds, etc. Some highlights from the four stages of search funds are as follows: Raising the search fund (3 months):  Write a formal proposal and business plan for the fund.  Sections of the plan include - executive summary, overview of process, list of screening criteria, detailed timeline and milestones, explanation of financing sought, outline of exit alternatives, backgrounds of principals and allocation of future responsibilities in the target.  Raising a fund typically takes around 3 months. Identifying and making the acquisition (20 months): The three steps in identifying an acquisition are 1) generating deal flow, scre...

On a trip out to Charlotte visiting PE firms, I talked to a fellow student that was interested in starting his own search fund .  I had no idea what one was, so he gave me the 30-second description and then pointed me towards a couple websites to learn more about it.  The basic idea of a search fund is for an entrepreneur to raise funds to allow them to search for a target business to acquire, operate, and then exit.  In the initial stage, you identify investors that are interested in making private equity investments.  You pool together small investments from those investors ranging between $15 to $20k for a total of $150 to $400k.  This initial fund pays the entrepreneur's salary and expenses while they search for a target company to acquire.  In the next stage, the investors buy the company and hand over the company to the entrepreneur to lead as CEO or President.  The entrepreneur's goal is to grow the company for 4 to 6 years to the point where the company is ready for an ...