Have you heard about Search Funds and wondered what sets them apart from other investment-based buyers? Join us and Abdel Rahim, a search fund investor, as we discuss the search fund model for selling businesses and how it offers founders a smooth transition, flexibility, and potential equity rollover for sellers.
The searcher is a person who will take on your role, which means the legacy will stay on. The employees will keep their jobs.
Ibrahim Abdel Rahim
What You’ll Learn
Understanding Search Funds:Search funds are vehicles used by entrepreneurs to find and buy small businesses. The searcher becomes the CEO, and the old founder often stays on as an advisor, making the transition smooth for employees and the business.
Demographics and Experience of Searchers: There are two types of entrepreneurs or searchers: sophisticated entrepreneurs with consulting or private equity backgrounds and operators with CEO experience.
Leverage and Operational Skills: Search funds use leverage, both equity and debt, to buy businesses, which helps in growing the business and achieving higher multiples at exit. Most searchers have never been CEOs before but are supported by experienced investors who help them with various aspects of running the business.
Industry Preferences and Investor Base: Search funds target businesses that do not require significant capital expenditures, making B2B and service sectors attractive. The investor base includes professors, ex-CEOs, and funds, with a growing interest in search funds due to successful exits.
Concerns and Benefits of Selling to a Search Fund: The primary concern of entrepreneurs selling to a search fund is that the searcher will maintain the legacy and employees’ jobs. The search fund model offers flexibility in terms of founder involvement, with some founders staying on as advisors and others leaving completely.
Due Diligence and Deal Structure: Due diligence is managed by the searcher, who has a budget for this process and hires professionals to conduct it. Entrepreneurs can vet search funds by asking for letters of interest and meeting with investors to ensure the searcher is serious and committed.
Topics Covered
Understanding Search Funds [3:14]
Demographics and Experience of Searchers [7:29]
Leverage and Operational Skills [10:46]
Industry Preferences and Investor Base [13:17]
Concerns and Benefits of Selling to a Search Fund [17:16]
Managing Founder of Moonbase Capital | Barcelona, Spain
Ibrahim is a Managing Founder of Moonbase Capital, a Barcelona-based firm investing in SMEs through the Search Fund model. Before founding Moonbase Capital, Ibrahim built and led Doehler Egypt, where he managed the largest manufacturer of food ingredients in the Middle East and Africa. Prior to that, he was a consultant for McKinsey Milan, subsequently leading the setting up of the McKinsey Egyptian arm in Cairo. Ibrahim holds two master’s of business from INSEAD and the Stanford Graduate School of Business.
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