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The More Things Change, The More They Stay the Same

Searching in 2009 vs 2023

I recently stumbled across a note written by Paul Thomson, a former business school classmate of mine, about his experience of doing a search fund. Paul and I graduated in 2009, and reading his note I was stuck by both how different and how similar the search fund world is.

I believe the similarities to 2009 are much stronger than the differences from 2009. The more things change, the more they stay the same.

Please note that the reflections here relate to raising and pursuing a search fund - this is different from trends in self-funded search. However, I’d expect to find a similar pattern of things both changing and staying the same if you had a similar compare/contract exercise for self-funded search in 2009 vs 2023.

You can read Paul’s note here.

The More Things Change…

Money has flooded the search ecosystem, making fundraising faster and easier (for some): Paul contacted 92 people and had 28 “nos” and 35 “no replies.” He spent $12,000 on travel visiting potential investors before the fund was raised. Since 2009 the amount of capital earmarked for search has grown exponentially, and now there are many funds and individuals sponsoring search acquisitions. I raised my search fund in a month (not including some prior relationship building), and the hard part was figuring out which investors I would say “no” to. The caveat here is that there are still people struggling to raise a fund in 2023, but the fact remains that there’s a lot more capital in the ecosystem.

Search techniques are different: Paul had letter writing and phone calls as a core part of his outreach campaign in addition to email. Today email is the core of most searchers’ outreach, and it happens via a campaign with multiple emails (usually six emails over the course of a month). I have yet to experiment with letter writing, but after exchanging a few texts with Paul before writing this, I’m going to add it to the list of things to try with prospects I’m especially excited about.

Search fund sizes and use of funds have changed: Paul’s fund was $300k, my fund was $670k. Searcher salaries are higher, and searchers today are spending a lot more money on software. Services like Grata (used to create a list of companies in an industry or niche) are now table stakes and can be quite expensive.

…The More They Stay the Same

Again, after reading Paul’s note I was struck by how the core of searching is really the same in 2023 vs 2009. There were many things I wanted to surface here, but I’ll keep it to three:

It’s a sales process where grit and determination matter most: It took me a few months of searching to understand that search is sales. Sometimes the outreach I do feels like a slot machine, and I’ve realized I need to focus on putting as many tokens in the slot machine as possible. Yes, industry selection and strategy matters a lot, but not as much as having as many lines in the water as possible. This is a grind, and it takes a lot of grit to keep doing the same thing again and again and expect a different result.

In the end, I just wasn’t innately very good at industry analysis and perseverance rather than intellectual thought was my only trick.

Paul Thomson

Optimism is key: I loved the quote below from Paul. It resonated with me because I feel the same way - I know I’m going to find a company. Not just “a company” but great company with superb people that’s a strong fit with my skills and experience. This keeps me going, and if I was lacking this conviction I worry that this process would start to wear me down.

The biggest factor was that I had total belief I would find a deal …. in hindsight this was extremely optimistic.

Paul Thomson

Search is a game of cultivating and nurturing relationships: Paul’s note is full of insight into how he cultivated and nurtured relationships: building an aligned investor base, finding an intern team that’s dedicated enough to work full-time for free, and most importantly, building trust with business owners. This is really the core of searching, and I’m sure this will never change.

The two largest factors to getting the deal done were that the owner and I liked each other and that I spent 6 months, almost full time ‘camped’ on a classmates sofa almost on the sellers doorstep. In the final 2 months I would work each day in a café in Venice Beach, always ready to see the seller.

Paul Thomson



Future Newsletters

Thanks to those of you who have written with suggestions on future topics. If there’s anything in the ETA world you’d like to see covered in more depth, drop me a line and let me know.

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