Self-funded search investors typically fund the search phase of an acquisition, taking equity in the eventual company rather than expecting fixed returns. They evaluate opportunities by looking for stable businesses with predictable cash flow, strong management, and growth potential. In this process, self-funded search investors often play a critical role in guiding strategy and assessing deal viability. Their involvement can range from hands-on guidance to a more passive advisory role. Returns usually come from equity upside after a successful acquisition. Best practices include having a clear thesis, thorough industry research, and transparent deal structures that align incentives.
I’m exploring the world of entrepreneurial acquisitions and came across the concept of self-funded searches. I’m particularly interested in understanding the role of self-funded search investors in this process. How do these investors evaluate potential acquisitions, and what kind of returns or involvement do they typically expect?
Are there best practices for approaching them or structuring deals? Any insights from those who have worked with or as self-funded search investors would be incredibly valuable. I’m hoping to learn more about their expectations and strategies before diving in.