Weekly Thoughts: A Different Type of Buyer
Updated: Feb 12, 2019
What differentiates me as an Buyer of Your Company... Here are a few thoughts..
The Search Fund Model (aka Entrepreneurship Through Acquisition) offers recent MBA graduates, such as myself, and experienced operators with limited capital resources to identify, source, own, and grow a small to medium-size privately-held company for the long-haul.
The decision for an business owner to sell their company to an search fund entrepreneur, rather than to: a strategic competitor/acquirer and an private equity firm, is a great alternative for several reasons.
In most cases, sellers are interested in factors in addition to the financial terms (i.e. competitive price) of the deal. As an search fund, our team offers a better alternative option that the business owner may not have considered with a private equity firm, and thus presents great viable options to the seller.
For example, since I will be the leader to personally lead and operate the business post-transaction, I am able to clearly delineate how I will run and grow the business for the long haul; my vision for where growth may lie for the business ahead; what challenges can be overcome with strong leadership, good systems in place, and a strong governance plan; and how I intend to cultivate the employees, preserve customer relationships, and continue to support the various non-profit and philanthropic causes at the company.
Additionally, selling your company to a search fund entrepreneur can be a very compelling option, particularly for company owners: who do not have a natural heir in mind and groomed; who wish to sell their company to another entrepreneur who resembles their younger selves (i.e., ambitious, gritty, scrappy, inquisitive, and thoughtful); those who want to avoid the traditional private equity restructuring process; or those who want to avoid brand and/or employee dissolution from the acquisition from an strategic competitor.
As the buyer of your company, there are a several differences that make myself the ideal buyer for your business, which are:
First and foremost, listen. Listening to: your story; your motivations for starting and selling your company; your insights into the industry and its' industry players; and what's important to you in consummating this transaction.
Being not pushy. As entrepreneurs and former deal makers, we understand that these type of transactions between an small business owner and an entrepreneur may take longer than the typical M&A transactions. So we are not pushy, we prefer to move the negotiations at the level of comfort for both parties.
My word is my bond. My dad has always ingrained in me that "a man/woman's word is their bond, so that's what you have to live up to. And, that's one of the only few things a person has in life". Just like in my personal life, in my business life - which extends to being an entrepreneur and business owner/operator - I intend to live up to the promises that I have made to the previous owner and their employees, customers, suppliers, and community stakeholders. If for some reason, I am unable to live up to a promise made, a deadline given, or something else critical, I believe in communicating those challenges and establishing a new timetable, deadline, expectations, updates, etc. in a timely manner.
Being flexible. We understand that every transaction is different - from the seller's wants, needs, dreams, and other life ambitions - to industry dynamics, company growth prospects, specific deal terms, and post-transaction involvement. We are open-minded guided by a culture of personal relationship, honesty, good communication, and flexible deal structures and terms that meet both of our needs.
Non-geographically constrained. Regardless, of where your company is located, my wife and I are willing to relocate to the company's local community and become embedded community members - i.e., church, non-profits, school, etc.
Grabbing a piece of the American Dream. My motivations for buying your company is multi-faceted but leads to one simple explanation: grabbing a piece of the American Dream. Our team - includes myself, my wife, investors, mentors, and advisers - is intensely focused and dedicated to supporting me through the process of buying, operating, and growing my first business. For my wife and I, we are grateful for the individuals that support us, and we view this great opportunity for our chance to grab a piece of the American Dream that is offered to all Americans in this great country. By being ambitious, gritty, scrappy, inquisitive, and thoughtful, we believe we can realize this dream with the right owner and company.
Not an financial engineering exercise. Yes, me and my firm are backed by long-term investors who are patient and looking to add-value to the business I acquire. Given the long-term nature of this transaction, we are not looking for a quick flip or an financial engineering exercise - which most private equity investors are and have been known for. Our team's investors, mentors, and advisers will form the basis of a good and enhanced Board of Directors to help me guide the company for the long-haul.
Relatable Entrepreneurs with a Long-term focus. We understand that most, if not all, owners deeply care about is someone that will take over their business, that have the following guiding characteristics: someone who will continue with the company as it is and take it to the next level by leveraging the existing culture, employees, and customers for the long-haul.