Search Fund --> PE? What Happens When a Search Fund Fails?
Applying to grad school for an MBA. I see that search funds are becoming more and more popular. However, I've read into the significant difficulties surrounding a search fund (search fund founders are, after all, basically entrepreneurs). If this is something I ultimately look into and the search fund fails to find a deal, can I leverage that experience into MM / LMM PE or growth equity? I assume the skills (sourcing, deal structuring, etc.) are similar, but unsure if it has been done. If not, what happens to the search fund dude? Corp dev? "Strategy"? Chick-fil-a?
I saw people going back to their old job (banking PE, etc). Skills are probably transferable but not sure will help you getting into finance if your not from that background.
From my discussions with some who failed, they either went to previous job, were hired by a successful searcher to join the company, were hired by one of their investors in some capacity, or recruited for what they would have gone for post-MBA.
I'm currently running my own search fund in the US and recently graduated from a top intl. business school (LBS / INSEAD / HEC). My background pre-MBA was family office --> MM PE.
One of my sourcing strategies for the search fund has been to connect with LMM / MM PE funds to ask them to share deals with me that are too small for them to add to their portfolios. During these conversations, I've had a number of Partners offer me jobs or ask if I would be interested to get into PE. Would highly recommend this approach if you can get in front of the MM funds since you 1. have a $300k min comp. package waiting for you if the search fund fails, and 2. it significantly increases your deal flow from a source that others may not be utilizing.
Still angling for a thicc offer at Chick-Fil-A tho...
So HEC? lol
Im looking for pre-mba private equity related experience. Can we connect further if there is a potential internship/contribution opportunities at your fund?
At this point I am not taking on interns, but I would check out searchfunder.com - you should be able to find opportunities for work there.
Some really sound advice, thanks.
I ran into a few guys with failed or stalled funds that aren't really going anywhere at a conference I attended last year. Seemed like most were gearing up to go back to PE.
Is PE viable if you don’t have a PE background pre-search fund?
You can join in an operations role if you have real entrepreneurial experience.
Interned at a Search Fund a couple semesters ago. I heard a story of a guy that couldn't find another company that he wanted to buy, but eventually settled on buying 30% stake (smaller than the capital available to the investor) in business contingent on him taking a management role. The person who bought the stake also would get a bonus if he improved earnings by specific thresholds in 1, 3, and 5 years. Turned out to be an interesting alternative.
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