Friday, May 27, 2011

BOVARD Timothy, CARRICK-CAGNA Anne-Marie
Search Funds: An Alternative Route to Becoming an Equity-Owning Manager
© 2011 INSEAD Case Study

This note is divided into two sections. In the first part, Simon Webster, widely regarded as the pioneer of search funds in the UK, recounts his experience of creating his first search fund, buying a company in 1995, and selling it for £30 million in 2005, making a great return on investment for himself and his investors. The second part introduces four other European search funders who are at different stages - one who has closed his fund and is about to acquire a company; one who has just closed his fund and is looking for a suitable business to purchase; and two who are at the fundraising stage. A discussion ensues between the search funders of their different approaches, the challenges they face and their own experiences of the model.

Pedagogical Objectives: The aim is to introduce the search fund model to students (in particular students studying outside the US where the model is still relatively unknown). The discussion between the search funders allows the students to weigh up the pros and cons of the model - is it the right path for them to acquire a company? It gives responses to the questions frequently asked surrounding the search fund model, offering concrete examples of successful funds and some of the pitfalls to avoid. It gives advice on how to approach potential investors, such as whether to have a partner, and the best time in your career to start a fund.