Search Funds - 2005: Selected Observations
H. Grousbeck, Mike Harkey. (2005)
Stanford GSB Case E-215, 14 pp
Dated 12/23/05. Sample: "a total of 71 first-time search funds that agreed to participate"; 12 still searching, 26 operating, 33 "had failed to make an acquisition, sold, or closed down their acquired firms"; returns computed on 49 funds (p5). Headline: "the blended pre-tax internal rates of return (IRRs) for individuals investing an equal amount in each of those funds was 37.3 percent or 37.7 percent" (p1); "24 percent of all the search funds we studied failed to make an acquisition" (p3); "The median purchase price of acquisitions increased slightly from $5.4 million in 2003 to $5.7 million in 2005" (p6). Same exclusions as 2003 (serial searchers, start-ups, under 12 months of operation) and same terminal value conventions; a small number of funds disclosed only partial information.