3 Benefits of the Traditional Search Fund Model
Take a look at the benefits of conducting a traditional search fund model, rather than searching using other models.
3 Benefits of the Traditional Search Fund Model
- Low financial risk profile
- Asymmetric upside for a successful searcher and operator
- Valuable experience independent of outcome
The traditional search fund model is an attractive proposition for ambitious MBA graduates because the initial financial risk profile is low. Because your search is typically being fully financially supported by outside investors, traditional searchers that don’t close on an attractive acquisition opportunity suffer no financial penalty (aside from the opportunity cost of a couple years of post-MBA corporate experience). In contrast, the upside for searchers and operators is fairly high. Not only do they gain invaluable CEO/operator experience, but they also build a network of valuable contacts—including his/her newfound well-connected search fund investors—and have the opportunity to build meaningful equity in the business without having to put any of their own capital into the deal themselves. Regardless of whether or not a searcher is successful, he or she can pursue future business ventures or re-enter the job market with meaningful leadership and managerial experience.