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 原搜狐COO古永锵复出 新公司今起正式启动 |
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原搜狐COO古永锵复出 新公司今起正式启动 -- 小报记者 - (516 Byte) 2005-11-21 周一, 12:28 (1250 reads) |
小报记者
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作者：小报记者 在 海归商务 发贴, 来自【海归网】 http://www.haiguinet.com
Search Fund Concept
The search fund concept has been in existence since 1984. A search fund is an investment vehicle in which investors financially support an entrepreneur's efforts to locate and acquire a privately held company. In the case of a first-time search fund, the entrepreneur is usually a recent graduate from business or law school and does not possess much, if any, general management or operating experience. In general, for their initial investment search fund investors receive both a carried interest in the acquired company, as well as pro-rata right of first refusal on the capital required to fund the subsequent acquisition.
In order to mitigate operating and investment risk, search fund entrepreneurs generally target industries that are not subject to rapid technology change, are fairly easy for them to understand, and are fragmented by geography or product line. Presumably, industries fragmented across one dimension or more offer enhanced opportunities for growth, either via acquisition or product extension. Within the "preferred" industries, companies are targeted based on their sustainable market position, their history of positive, stable cash flows, and opportunities for improvement and growth. Healthy, profitable companies with a proven second-tier management team are preferred over turn-around situations. By adhering to such a disciplined list of acquisition guidelines, search fund entrepreneurs have been able to greatly reduce the risks typically associated with investing in individuals possessing little-to-no operating experience.
If the target is a sustainable business with only modest growth, oftentimes it will sell for a multiple equivalent to 40% to 100% of revenues, with a portion of the purchase price financed with debt. Purchase prices generally range from $5 million to $25 million, with the equity portion of the completed transaction between $1 million and $7 million, or between 10 % and 75% of the total purchase price. The acquisition is expected to be at fair value. Ideally, the acquired company would provide generous cash flow and not possess significant debt service； thus, short-term superlative performance by the search entrepreneur would not be required.
The Process
The search entrepreneur begins by writing a business plan that describes what he or she hopes to buy in general terms, emphasizing the acquisition process and criteria. The document is used to amass a group of individuals who will provide advice and assistance, as well as contribute initial capital to pay the entrepreneur a salary and cover expenses during the search process. Typically, this group consists of 8 to 20 investors who invest $20,000 to $25,000 each. Search entrepreneurs raise these initial funds in about 3 to 4 months； two years or more are often required to identify an appropriate target and complete the acquisition.
When a target is located, each search fund investor decides whether to participate in the acquisition transaction. A capable board is recruited, often including investor representation. In the first 12 to 18 months after an acquisition is made, entrepreneurs typically make no radical changes to the business, opting instead to learn how the company has run successfully and keep it going. Once the entrepreneur gains familiarity with the chosen industry and is comfortable operating the business, then he or she usually begins to make changes, as necessary.
The Creation of Value
After a company is purchased, value can generally be created through one or more of the following ways: revenue growth, improvements in operating efficiency, appropriate use of leverage, or expansion of valuation multiples associated with the company's industry. Typically, those means of creating value are not mutually exclusive； ideally, more than one will apply to a search fund investment. Revenue growth may result from internal growth initiatives, pricing improvements or the acquisition of like businesses. After a growth plan has been executed, the resulting company can be expected to be much more valuable, even when sold at the same multiple for which it was purchased. Improvements in operating efficiency can make a business more profitable； thus, increasing its value. Purchasing a company with leverage can enable the equity in the business to grow as debt is paid off successfully. Through the use of leverage, economic value can be created for a company's investors, even if no other fundamental improvements are made to the business. Additionally, under search fund ownership, a company may possess increased cash flow available for reinvestment, as the search fund entrepreneur will typically receive much lower compensation than did the prior owner.
作者：小报记者 在 海归商务 发贴, 来自【海归网】 http://www.haiguinet.com
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