A behind the scenes look into the Investor-Searcher Dynamic

The first panel at the inaugural EtA Forum provided a lively and hugely interesting discussion, as success stories in both investment and search across Australia and New Zealand came together to share their thoughts on a wide range of topics.

From the appeal of search to investors, through to the relationship that investors and searchers have, this panel is an essential guide to a truly unique relationship in investment. As the panelists agree, one of the most appealing features of being an investor in a search fund is that it’s a rare opportunity for people in private equity to get “hands on.”

Searchers and their investors tend to build a deep relationship, which is based on a mutual exchange of information. Searchers do generally know the things that they don’t know, and investors are able to provide them with the networks and information that allows the acquisition to flourish. It can also help identify poor opportunities more quickly. Here the panel share a story about a search target that ultimately proved to be an option that the searcher didn’t want to follow through with. Thanks to the network that the investor was able to provide, they were able to meet a business leader that had run a similar operation, determined the weaknesses in the business, and was able to exit the opportunity much more quickly than they might have otherwise.

Finally, to round off the panel discussion, the group discussed the role of cap tables and how investors and searches alike can make sure they’re giving every opportunity the look it deserves, leaving nothing on the table. For anyone interested in the sector, this panel was a true behind-the-scenes look at one of the key dynamics and relationships in the whole process.

Connect with Pete: https://www.linkedin.com/in/peteseligman/

Connect with Luke: https://www.linkedin.com/in/luke-taylor11/

Connect with Jack: https://www.linkedin.com/in/jake-maisey-852b3944/

Connect with Doug: https://www.linkedin.com/in/douglas-cook-b5521b/

Connect with Orlando: https://www.linkedin.com/in/orlandoguerra/

What we discussed:

1:28: Introduction to the panelists

6:06: Jack Maisey explains the kind of support that searchers can expect from an organisation like Dorado Capital.

7:20: Doug Cook explains the attraction of the search investment world.

9:51: Orlando Guerra explains the benefits of having a partner in the world of search.

11:44: Jack and Orlando shares a case study to highlight the relationship between investors and searchers, and how they can be mutually beneficial to each other.

14:48: Orlando explains the cap tables and how to structure the research around companies while searching.

17:43: Jack explains the importance of appointing investor directors to the board.

18:23: Doug highlights his views on the role of the investor, transitioning into the operating phase, and the ongoing relationship they should have with the searcher.

21:45: Q & A with the audience.

27:16: Pete provides a summary and final analysis of the panel discussion.

Quotes: Jack Maisey: “We have connections that could help the searcher and provide some more background…. It’s valuable having boots on the ground and actually meeting the owners of those companies.”

Luke Taylor: “I come from an operations and general management background, so didn't come to the table with the same depth of knowledge in the financial modelling space. And so I really linked into the support that my investors provided to iterate myself up to a point where my own financial modelling was able to cut the mustard.”

Doug Cook: “I ask a lot of questions, and through that I learn a lot about the searcher, how they think and operate. Everyone’s go strengths and weaknesses, so what are those, and how can I help balance those things out… and get out of the way when I don’t really need to ask that extra question because they do know what they’re doing.”

Orlando Guerra: “It’s advantageous to have a partner, as that gives you someone to bounce ideas off.”

Luke Taylor: “It’s an almost symbiotic journey, and the relationship between the searcher and investors is really critical.”

Orlando Guerra: “One of the things I learned quite quickly is that there are a lot of things that I don’t really know.”

Orlando Guerra: “It’s much more than money that you’re receiving from investors. It’s really the knowhow and the things that you don’t know that you’re leaning on them for. It was important for us to be able to build that big team that could cover a lot of different things at once.”

Jack Maisey: “The cap table is super important for the investors as well. To be able to look at the cap table and see that the searchers actually have the people around them that can support them.”

Jack Maisey: “That’s one of the great things about searches. We’re all in it together.”

Doug Cook: “There are times where I would talk to the searcher every month, and then other times where we didn’t talk for eight, nine months at a time, because he didn’t have a need for my skillset. I’m happy to be involved and I like to have good visibility into what’s going on, but it’s the searcher that’s actually in the business and running it.