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  • Chris J.

Standing Out as a Search Fund in an Increasingly Competitive Space

More and more articles continue to come out about the growing popularity in search funds. Entrepreneurship through acquisition (ETA) has sprouted in demand from top MBA programs as a variety of students mid-career are looking to garner more operational experience in running a small business.

The space has become increasingly competitive to (i) find institutional investors to back you given there are so many new search funds being formed and (ii) find a proprietary family/founder-owned business to acquire given there are hundreds of students each year graduating from top programs and competing. It is becoming more important than ever to differentiate your model and stand out in the space

Our RiverStone Reporting team has helped over 15 search fund investors (majority Ivy league searchers) both pre- and post-closing to make sure you find an attractive business to acquire and ensure your investment gets off on the right foot. Building institutional-quality investor materials including a complex LBO model with upside and downside return sensitivities in addition to your base case is important to show you've done your work. Many searchers may lack details around competitive landscape and benchmarking, proving why their desired asset is truly differentiated in the marketplace, evaluating hard-to-find precedent transactions and private comparables, and finding meaningful industry metrics around total addressable market (TAM) and growth rates / CAGR's for niche subsectors. We can also assist you with structuring the transaction through creative earnout mechanisms, seller notes, typical debt financing pricing and terms, and ensuring you have capital structure flexibility well into your investment.

We assist search funds post-closing with creating 100-day value creation plans, bolstering their monthly financial KPI reporting metrics, and developing meaningful quarterly board packages that provide valuable insights for their investors as they look for updates on their investment. Our RiverStone team typically assists searchers on an hourly basis and we look to roll 100% of our compensation into the transaction, providing upside and creating strong alignment of interest. RiverStone will be attending the McGuire Woods Independent Sponsor conference in Dallas as well as the Harvard ETA conference in Boston in October. If you are in potential need of affordable, institutional financial and operational help with evaluating a business to acquire our team would love to help. RiverStone costs significantly less than hiring on a full-time CFO, while providing the same resources and insights into financial performance. Reach out to our team today!

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