2018 Search Fund Study: Selected Observations
Peter Kelly, H. Irving Grousbeck, Austin Yoder, Sara Rosenthal. (2018)
Stanford GSB Case E-662, 34 pp per catalogue (PDF is 18 two-up pages)
Dated September 24, 2018; data as of December 31, 2017. Sample: "325 first-time search funds formed since 1984", described as "all the known search funds in the United States and Canada except two that did not respond"; 86 searching, 6 deviated; "Of the funds no longer searching (233), 69 percent (160) had acquired a company and 31 percent (73) had ended their search without an acquisition"; 137 acquisitions in the financial analysis (7 excluded for insufficient data, 16 held under one year). First edition to state the exclusion outright: "we excluded funds led by principals who had previously raised a search fund, who self-funded their search, or who pursued their search with a single search sponsor". Headline: "search funds in aggregate provided an ROI of 6.9x and an IRR of 33.7 percent to investors. The median fund returned 1.0x"; median purchase price for 2016 and 2017 acquisitions $13.1 million, median purchase price / EBITDA 6.3x. Limits stated: follow-on financings and tax distributions excluded; earlier data "may have disproportionately represented companies with lower returns"; data through 2009 include international funds. (Two-column layout made page attribution unreliable in text extraction; all quotes are from PDF p1 to p6.)