Search fund internship opportunity

I'm an incoming M7 MBA candidate without prior investing experience, but recently was given an offer through an unpaid internship to join a search fund started by someone from my school. Opportunity cost would be losing the next 2 months of salary, and I'm not sure how much this role will help me in marketing myself for PE internships/jobs over the next two years.

I read some mixed things about search funds on this forum--anyone have experience with one, and would this be a positive step towards my goal of working in PE? The role would be mostly industry research, creating a target list, some sourcing/calling, and maybe a bit of financial modeling.

Comments (13)

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  • Analyst 3+ in IB-M&A
Jun 2, 2020 - 8:55am

Went to a top 30 MBA program and took an Internship at a Search Fund to get some PE experience. Its actually a pretty unique experience I think. Think of it like a start up, you're essentially wearing 6 different hats and everything you work on has major ramifications for the success/failure of the fund. It is definitely the kind of internship you will get out what you put in. I found that stepping up and taking on new tasks / asking for new tasks was the best way to get some visibility with the founders. Once they understood they could trust my work product and saw my work ethic they began to give me more and more tasks. My responsibilities included sourcing (this became less and less as they began to trust my work product), modeling (DCF and LBO), management meetings, taking calls from bankers with potential targets, speaking to company management, evaluating potential deals, etc etc. These firms generally have founders and partners who come from top banks or other PE firms. With that being said I spoke to my founder about his time in banking and asked for some references to speak to. He was more than willing to put me in contact with a lot of his former colleagues and help me network. Overall I think it is worth it if you do not have anything similar that pays lined up. Feel free to ask specific questions and I can try to shed some light on those areas.

  • Intern in PE - Other
Jun 3, 2020 - 1:39pm

I'm an undergrad and this post sums up my experience working at a search fund. I had significantly greater visibility and responsibilities at the search fund and drove several workstreams vs. my current role at a MM PE.

Dec 22, 2020 - 4:23am
Big Brown Monkey, what's your opinion? Comment below:

When reaching out to search funds should you contact partners and CEOs if that's the only peoples bios provided in their about us section?

  • Prospect in IB-M&A
Jun 2, 2020 - 9:51am

did an unpaid search fund internship with a guy who hired a few interns for the summer

90% sourcing and mind numbing data entry work

i try to convince myself i learned a lot just to justify all the hours i put in that summer

would not recommend

  • Intern in PE - Other
Jun 3, 2020 - 1:42pm

I had the opposite experience. Out of curiosity, did you actively ask to be involved with models or DD? Due to me being very proactive about wanting to be more involved with modeling and DD, I was given those tasks.

  • Prospect in IB-M&A
Jun 3, 2020 - 6:31pm

i did, but there wasn't much modeling or DD to do. very few companies we looked at got to the stage where we started building out their models (out of the 100s of companies we looked at that summer we built models for maybe 2).

  • Associate 3 in Other
Jun 2, 2020 - 10:58am

Thanks for the comments. My point exactly on conflicting views, but I suppose this is indicative that the experience can be wildly varied--sometimes a great experience, sometimes a total waste. How do I know which this is and adequately do due diligence? There are some red flags like there being just one person who works there (founder), no track record of anything (comes from Ops and not IB/PE), but also the guy seems nice and impressive academic background. I'd definitely be wearing a lot of hats, but given how early the fund is it's hard to gauge whether this is going anywhere or it'll be a bad use of time.

  • Analyst 1 in PE - Growth
Jun 2, 2020 - 5:56pm

If there isn't much to diligence on the search fund, then you will have to trust what the Partner says your day-to-day will be. I would try to be transparent with the Partner and see what they are looking for in a candidate and what skills you will gain from the experience. If they are not paying you, then I think it is very reasonable for you to be very straightforward about what you want and make sure it is a strong match. After all, these people are able to pay you nothing and get away with it because in return they will give you a solid experience. Make sure the interview is a two way street.

In regards to your red flags, they seem pretty normal to me for how a search fund is structured. A typical search fund is structured with one Partner who has an MBA from a top school and is looking to gain operational experience as they try to become a CEO of the company they are acquiring. The Partner will have a support group alongside them but these guys are not expected to be involved with the day-to-day sourcing and operations of the search fund. I also don't think it's unordinary for the Partner to have operational experience, not IB/PE experience. To be honest, the prospective CEO should come from an operational background. IB guys are good at executing deals, not necessarily running a company. PE guys are good investors but don't necessarily need to be good operators. That is not to say that IB/PE guys can't/shouldn't start a search fund though - some do because they believe they have what it takes to be an operator.

To sum it up, your red flags aren't anything glaringly bad. Search funds are structured with one Partner and an army of unpaid interns. If you have time to continue the search, you could try and find a Partner who has IB/PE experience. The value to an IB/PE guy over an Ops guy is that you can receive mentorship to help launch your career in IB/PE.

I guess the only tip I have is to look for previous interns on LinkedIn and see their academic profile. If you find some MBA Interns, reach out and see if they'll talk about their experience. If they don't talk you can also sort of infer that the search fund is more technical if they are looking for MBA interns. This is not a guarantee though, so take it for what it's worth.

  • Associate 3 in Other
Jun 2, 2020 - 6:13pm

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