Mike Bristow, managing partner of Arcadian Capital
Partners, considers the search fund model for investors and
entrepreneurs.
First developed across the Atlantic in the 1980s, after
consistently delivering an internal rate of return (IRR) of more
than 32% in the US, the search fund model is gaining momentum in
the UK. The 2007 Stanford Business School study of 61 search funds
concluded an average 52% IRR for investors, making it an exciting
asset class that allows investors to achieve exceptional returns
and support talented entrepreneurs to acquire and run a
business.
Capital is raised from around ten investors in two stages. The
first stage is the 'search fund', which requires £20k
to £25k from each investor to finance the search for a
high-potential business (covering search costs and a modest salary
for the entrepreneur). Once a target is identified, the investor
has the option (but not the obligation) to invest directly in the
identified company (usually
