In all our investments, we seek to partner with exceptional entrepreneurs. In search, we back exceptional people who are seeking to be entrepreneurs through acquisition.
Search entrepreneurs ("Searchers") spend up to 3 years looking for a company to acquire and then operate as CEO. Approximately 60% search solo and 40% search with a partner. Searchers raise a small amount (usually $300k-$400k per Searcher) from investors who ideally provide the support and equity capital needed to find and acquire a target company. Typically, ideal acquisitions for our Searchers are companies with strong recurring revenue, $2 to $5 million of cash flow, and a history of profit and growth.
While originally popular among newly-minted MBAs, the search model has captured the interest of many mid-level managers and even seasoned executives. Over 200 search funds have been formed since 1983 and the model has gained significant popularity in recent years. Search investors include both seasoned operators and investment professionals who immediately enhance the Searcher’s network, due diligence capabilities, and experience base.
Our Founding Partner and Chairman, Joel Peterson, was one of the early investors in search funds and a former board member of Asurion. Joel teaches courses in entrepreneurship and leadership at the Stanford Graduate School of Business and his firm, Peterson Partners, continues to be an active search fund investor.
Searchers need three resources from investors: network, capital, and assistance.
1. A Large Network. Our network includes over 130 portfolio company CEOs and more than 100 investors with deep expertise in a variety of private equity, venture capital, and real estate markets. We regularly leverage this network to assist our Searchers.
2. Flexible Capital. Our dedicated search group provides the initial capital required for the search unit and pro-rata or super pro-rata investments. Additionally, we have the flexibility to back Searchers with larger transactions.
3. Assistance. Searchers often have a lonely road – whether looking for a business, or running one. Our mentality is that we work for our entrepreneurs, and we want to provide them whatever help they need. We believe our selective approach to investing in search fund entrepreneurs ensures our ability to deliver on our promise to be great partners. For us, success means building relationships that extend well beyond the first investment.
“Peterson Partners has been fantastic to work with. They really understand our business and industry, and their insights have been essential in helping us evaluate our long-term strategy. It’s been a pleasure to have team players on our board whose expertise adds real value to our company.”Mahesh Rajasekharan & Sumit Garg – Cleo