International Search Funds - 2020: Selected Observations
Lenka Kolarova, Peter Kelly, Antonio Dávila, Rob Johnson. (2020)
IESE ST-603-E, 36 pp
Dated September 2020; data as of December 31, 2019. Sample: "132 first-time search funds ... in 25 countries on five continents" (p3); same three exclusions (p5). Status: 50 searching; "Of the 82 others, 56 had acquired a company, 18 had ended their search without an acquisition and eight had deviated from the search fund model"; "Data from funds that had deviated from the search fund model were not included" (p6). Returns: "Of the 74 funds eligible ... 55 were included" (18 unsuccessful searches, 37 acquisitions) (p14); "international search funds have achieved an ROI of 2.4x and an IRR of 28.7%. When excluding unsuccessful searches ... ROI increases to 2.5x and IRR increases to 30.7%. The median search fund returned 1.1x ... the top-performing search fund returned 23.4x" (p14); median acquisition "purchase price of $11 million ... purchase price to EBITDA multiple of 5.6x" (p13). Follow-on financing excluded for operating companies but included for exits (p13 fn 10).