A search fund, also known as a search fund, refers to a group of investors who provide capital to one or several professionals to search for companies to invest in. These professionals can be managers or entrepreneurs.
In other words, it is a new form of investment where talented entrepreneurs receive money from one or several investors. This money is used to finance the search, selection, and acquisition expenses of a company with high potential for growth and success in the market.
It is important to note that search funds are also known as search funds. It is a modern form of investing that emerged in the United States between 1930 and 1935, especially in the business schools of Harvard and Stanford.
Importance of the search fund
Undoubtedly, this investment option aims to search for and acquire companies perceived to have great growth potential. All this is financed with the capital provided by the group of investors.
Search investment funds are characterized by being used to make a single acquisition. Also, the entrepreneur who takes on the role of Searcher becomes the top executive of the organization.
This form of investment is very important in the field of business. Since the investors who provide the capital choose the company in which they want to invest. But also, they choose the people who will be in charge of the company’s management.
Of course, this is very enticing for the investor and for the entrepreneurs. Since, together, the capital and human talent are employed to get more out of the money invested. Becoming great investment initiatives and projects.
The most important steps followed by the search fund are:
- Initial capital search
First, there is the initial capital search stage. In which the actor acting as an entrepreneur searches for investors to obtain the initial capital. Generally, he searches for 15 to 20 investors.
Of course, in this stage, the group of investors finance the expenses incurred in searching for business options. To do this, a person or group of people is chosen to carry out an investigation of the business environment. In the same way, these people establish the necessary contacts to find the most suitable companies for investment.
- Identification and acquisition
Second, the identification and acquisition phase takes place. In this phase, the entrepreneur after the search process identifies those companies or business opportunities that have a high growth potential. Then, they negotiate the acquisition of the selected company and take on the role of CEO.
- Management and growth
Finally, the management and growth phase begins. In this phase, the entrepreneur, who is now the CEO of the company, is responsible for leading and managing the company to achieve its growth potential. This means that the entrepreneur will be responsible for defining the business strategy, hiring the necessary personnel, and implementing the necessary measures to achieve the goals set.
In conclusion, search funds are a modern and innovative form of investment that combines the capital of investors with the talent and expertise of entrepreneurs. This results in great opportunities for growth and success in the market. As long as both parties, the investor and the entrepreneur, are able to work together and align their interests, the chances of success are high.
