In our first blog on this topic we explored the need to put the thoroughbred before the chariot – to sell the value of the Searcher and what YOU bring, before selling the virtues of the Search Fund model itself. Going deeper into the Searcher Value Proposition, current and intending searchers, Nikita Gossain, Alex Simmons, Greg Green and Nick Bamford identified further insights into how articulating the value that EtA Entrepreneurs bring to both investors and sellers can reinforce a very compelling and unique story.
Selling the value of YOU to the investors is one thing, but how (if at all) is that mirrored onto the other “sell” that needs to happen – the value to the business owner(seller)?
“I think that the propositions are quite different.” Says Alex Simmons. “Overtly they are similar but when you get into it, they are quite different in terms of what you are actually offering. Business owners tell me that they have had private equity approach them, but they still want the owner to run and manage the business. That does not provide the exit strategy that many owners are looking for.
“With business owners, where we get most traction and most alignment is that the searcher provides the management solution they are looking for. We are also well versed on and understand their needs for succession, preserving legacy and providing a management solution. They can walk off into the sunset with peace of mind. That’s pretty compelling and people get that.”
Conversely, approaching the value proposition from an investor’s perspective, “for substantial equity investors what they’re looking for is bright people who ‘get it,’ who can grow the business and take it to whatever level is required. They just want you to be able to come in and run a good business. So, the ‘sell’ to owners and investors are pretty different.”
So, to reiterate, with investors you are pitching “you” more as an entrepreneur. You are the person that they will be in partnership with for a long time – 5-to-7 years if not longer. For the business owner/seller you represent a very different kind of buyer. “They may not necessarily care as much around you being an entrepreneur, what they care about are things like legacy knowing that you are not a trade buyer or private equity.” Says Nick Bamford.
“So, I think you are fundamentally positioning yourself as something different. I mean it’s a similar set of thoughts, but to the investor I’m an entrepreneur that should be backed (and by the way I’ve got the model, which works), and to the business owner, it’s kind of saying, ‘Hey, I’m the surrogate child that you never had in the business (and by the way, I’ve got the model which works).’”
As a first time searcher in a new market that has not been educated on EtA, it may be useful to remind yourself that you do not walk into each meeting with an investor or seller alone. Behind you sits your network, your knowledge, and a proven model. In front of you sits the raw and real value that you can bring.
Keen to learn more about Search Funds and Entrepreneurship through Acquisition in Australia? Contact us at email@example.com – we’d love to begin the conversation. Checkout our Resource Page too for the latest global research and information on Search Funds.