Exploring Post-exit Dynamics for Search Fund Entrepreneurs
Keith Burns, A. J. Wasserstein. (2024)
Yale Case, no number printed, December 10, 2024
Sample. "we built a data set by surveying 151 traditional search fund CEOs who have exited. Of the 151 CEOs we queried, we received valid anonymous responses from 57." (p2); CEOs were sourced through investors. "According to the 2024 Stanford Graduate School of Business Search Fund Study, 160 of all search fund companies have exited. Our data set captures 35% of those exits." (p2). Field dates, geography and per-question n: not stated. Self-funded searchers excluded by construction. Headline numbers. "77% of our exits were to PE or PE-linked entities. Only 19% of our respondents were purchased by strategic buyers" (p2). "80% of CEOs remained with the acquiring company for at least six months, with 63% staying more than one year ... The average and median time frame with the new capital partners was two years." (p3). "A complete 65% of CEOs rolled some equity into the new transaction ... for those CEOs exiting to financial buyers, the median roll was 30%." (p3 to p4). "58% of CEOs evaluated their relationship with the new equity partners as getting worse or much worse." (p7). "This translates into an NPS score of negative 33" (p12). "61% of CEOs who continue to serve in an executive capacity in the recapped deal receive some equity ... Financial partners grant a median 4.8% additional equity points." (p18). Limits. Authors: "There might be reporting biases, and we sourced the CEOs who exited from investors, so we might have concentrated exposure to some investors"; the analysis is one-directional (CEO views only). Reader's notes: subgroup cells are very small; retrospective self-report; the 35% coverage claim does not show the 57 are all inside Stanford's 160; no tests. Endurance Search Partners and Goodwin figures quoted in the note are third-party.