The Search Fund: an investor's take on encouraging faith in the workplace

by Henry Kaestner

One of the hallmarks of the Christian Economic Forum (CEF) is that each delegate must write a whitepaper on a topic on which they feel God has given them some level of discernment.  There are 5 topics this year: 

1. A Christian Response to Governing Authority

2. How to Start, Build And Grow a Great Company

3. Technology Trends - What's Next and How Do we Prepare?

4. Maximizing our Investments

5. Sustainable Poverty Solutions - What Really Works?

The subject of my paper fell under category #4.  In it, I explore the concept of the search fund.  I look at the new asset class that has been the top performing segment of all private equity investments, and I explore how "searchers" cannot only deliver great financial returns, but maintain the cultural and spiritual legacy of a company.

This whitepaper is not as intimidating as it sounds....and it's only 2 pages, but a quick summary is as follows: 

There are tens of thousands of businesses owned by baby boomers across the US (and as I'm finding out here at CEF, the baby boomer concept isn't limited to the Germany, for instance, it's a big deal as well) who have worked to start and maintain a business that looks to honor God through loving it's employees, vendors and customers.  They are getting older and would like to sell their business, but they fear that the culture they have created, which flows from having God at the center, will disappear. 

Enter the searcher.  The searcher is someone who wants to be a CEO. He or she is typically younger, with an MBA, and at least 5 years of operating experience.   They seek to become an entrepreneur through acquisition, a concept referred to in the trade as ETA.  They may not yet have the funds to purchase the company themselves, so they raise a "search fund" to go and find a company.

I explain a bit more in the paper.  Know of someone that fits into the profile of a searcher or of someone who is looking to sell their company? There are several, larger funds that look to be a clearinghouse for such transactions by matching the seller with the searcher.  Housatonic and Pacific Lake are some of the biggest. Sovereign's Capital is one that is particularly focused on working with faith driven founders and searchers.

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