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Happy Thanksgiving! Today, we’re talking about search funds and SPACs!
Fund managers raise money and search for a particular company to buy.
Investors know that the company is undiscovered and not yet acquired when they begin to invest.
So, it fits more into the private equity space.
It’s not like the fund launch formula that I talk about because you set up the fund and raise capital before finding the perfect deal.
Additionally, once the company is acquired, the fund manager(s) run(s) the whole business!
They tell their investors, “We’re going to do x, y, and z to take this company from $25M to $100M.”
Chris Hendriksen started a seach fund, and after one year of cold-calling and searching, he became the CEO of VRI at age 28!
Sometimes, the investors only give the manager an allotted amount of time to find a company, like 18 months.
Instead of raising money privately, they just take a shell company public, and investors can buy shares in that public company.
The goal of this public company is to acquire or merge with another company.
This can be done quietly, so investors can find these great deals without the disadvantage of everyone knowing about it.
Conclusion
So, finance does not have ‘set rules’ that we must follow. There are so many niches and ways to make money and be successful!
Hopefully, you understand what search funds and SPACs are now!
Have a great weekend!
Thanks,
Want to get direct guidance for your fund? Schedule a time with my Fund Advisors!
DISCLAIMER: This content is for educational and informational purposes only. It is not to be taken as tax, financial, or legal advice. You should always consult a legal professional before taking action. Furthermore, this is not a recommendation to buy or sell any security. The content is solely just the opinion of the authors.
