What protects search funds from investors stealing deals?
If I am running a search-fund and present a deal I found to my investors, what stops them from taking the company I found and telling a friend or relative about it? Especially when investors are potentially investing in many funds, what stops them from telling someone else (maybe another search fund) about the company?
NDA? But in reality if your deal gets stolen by a big investor - you are SOL. Big part of business is figuring out who you can trust.
Nothing
NDAs? They poach your company, you sue them.
Yeah, but you'll still have to spend probably 10's of thousands of dollars, then what?
Very basic stuff. You send an NDA. In the NDA, there is a provision called a non-circumvent. The non-circumvent prohibits the recipient from buying the securities of the target. Don't reveal the target name until the NDA and non-circumvent are agreed to and executed.
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