After being an intern at a search fund I´ve been thinking what would be my perfect team to manage the search period. Investors are also a key part of it but I have limited it to the operating team.
Probably BBA students or interested in business analysis. They would have 2 main responsibilities:
1.- Each of them would “own” a set of industries. That means they would be aware of the dynamics, the main players and the news around them. This are the industries in which each of them would search for potential targets. They would also be responsible for proposing new industries to the team.
2.- They would do the first analysis on target companies and pass the qualified contacts to the associate.
Probably an MBA that would be almost an assistant managing director. The associate would receive the qualified contacts from the analysts and also from the intermediaries (mainly M&A boutiques). This person would be responsible for doing a more detailed analysis of the companies that passed the first filter and contact the owners to sense their willingness to sell. The objective is to send to the searcher the contacts that are willing to sell within the targeted industries. Most importantly, the associate supports the thinking process of the searcher (where is this industry going? Do I see myself running this company? What is a fair price for this business? How difficult would it be to grow inorganically?). Making the searcher see things from another angle.
About the salary…
I would pay a salary but a low salary. The reason for paying a salary is that it makes the internship more “official”. I believe paid interns are more committed and less likely to switch to another internship in a short time. It also shows the effort on the searcher side.
The reason for paying a low salary is that the value that the interns are going to get is not as much in money as in access and time of the searcher. That´s also the reason why I think the team should be kept small or the searcher won´t be able to dedicate enough time to them.
For MBAs, they are most likely thinking about starting a search fund. In this case, it is a no-brainer. They are going to learn everything from inside. In fact, the searcher can answer almost any question about the model and help in the thinking process of deciding whether or not to launch the fund.
For analysts, as it´s probably their first job the searcher can add massive value to them: How do I get admitted to an MBA? What is the GMAT? How do I prepare for a case interview? How do I restructure my resume? Just having a scheduled time to dedicate to the analysts is a great way to give back to them for the hard work.