Search Fund, the new way to entrepreneurship
Osservatori Digitali-Graduate School of Management study of the Politecnico di Milano: 15 active companies, with 10 acquisitions made to relaunch as many SMEs
4' min read
4' min read
Twenty-nine funds surveyed since 2016, 15 of which are active, with ten acquisitions made. These are the numbers of Search Funds in Italy, an innovative investment model that offers a solution to situations of generational transition and business continuity. In short, this scheme is created to finance the efforts of an entrepreneur (the 'searcher') aimed at identifying and acquiring a SME, with the objective of managing it by releasing its unexpressed growth potential.
A still little-known model in Italy on which the Graduate School of Management of the Politecnico di Milano sheds light, which together with the Osservatori Digital Innovation is launching the first Observatory in Italy on Search Funds and the first Elective Path of an Mba in Italy on this topic.
Technically, a search fund is an investment vehicle aimed, first of all, at financing one (or more) 'searcher', i.e. a person - typically a manager or a professional - who wants to become an entrepreneur, to look for a company to take over, and then, once found, to finance its acquisition. Thus, through search funds, the transfer of managerial and professional skills into the entrepreneurial world of SMEs is fostered, enabling the emergence of new entrepreneurial leaders who have the opportunity to acquire, manage and grow SMEs with high potential.
Originating in the United States in the late 1980s, the investment model sees a thousand active instruments worldwide.
But how exactly does it work? The Search Fund envisages four phases, a first in which the promoter raises initial capital from a group of investors, which in Italy, based on the data collected, takes an average of 3 months. A second, of research and acquisition of the target company, which takes an average of 21 months in our country. A third, of management and growth, in which the Searcher becomes the CEO and entrepreneur of the company and, with the support of investors, defines the growth plan, which on average lasts 41 months. The last phase is the Exit, with the exit from the investment for the Searcher and the investors (in Italy only one case so far).
