Search-fund Model Gains Popularity for Acquisitions

Using the search-fund method, entrepreneurs get money from investors to acquire established privately-held companies


An increasing number of people are using the “search-fund” model to establish themselves in business, D CEO reported.

Take for instance Simone and Malcolm Collins, a young couple who want to acquire an established company through the technique that’s also known as “entrepreneurship through acquisition.”

The Collinses have been getting advice from Nick Padlo, managing partner of Dallas-based search fund Graycourt Capital. Padlo, a former U.S. Army intelligence officer, used the search-fund technique to found Euless-based The Pet Loss Center, of which he is CEO.

Search-fund entails raising a pool of money from investors that will be used to locate and buy an existing, privately-held company. The company is then managed and grown with the objective of a lucrative exit, providing investors with a strong return, D CEO said.

With Padlo’s advice, the Collinses were able to raise $600,000 from 17 investors for the search part of their plan. That search could last up to two years, D CEO said.

The couple is looking for acquisition targets in a variety of industries that have $5 million to $50 million annual revenue, and are currently making 20 to 50 cold calls a week to companies in such industries as health care and apparel.

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