In early 2008, GlobalPEG founder Jacques Jonassaint developed a relationship with NYPPEX, a company that provides access to liquidity for equity and debt related securities in private companies. NYPPEX requested that Jonassaint build a portfolio of companies for its clients to invest in, so he began negotiating deal terms and developing post-transaction growth strategies for each target company. Within months, the portfolio included 14 companies in the US, Mexico, Argentina, and Brazil worth $500 million dollars, all in escrow, waiting for funds. This achievement unfortunately coincided with the 2008 economic crisis, but valuable skills were acquired in forming a search fund.
In the interim, Jonassaint has acquired a Business Degree in Accounting, from Utah Valley University, bolstering his knowledge and capabilities in this arena and went on to graduate summa cum laude with a Masters Degree in Political Management from The George Washington University in 2012.
Since 1996, the Center for Entrepreneurial Studies at Stanford Graduate School of Business has conducted a series of studies on the performance of search funds. For the 2018 study, using conservative assumptions, the aggregate pre-tax internal rate of return of the search fund asset class through year-end 2017 is 33.7 percent, and the aggregate pre-tax return on investment is a 6.9x ROI.
Against the backdrop of intensifying competition in the private equity markets, ubiquitous ultra-cheap debt, and record levels of dry powder in investment funds worldwide, asset prices are being bid up in a low-yield environment. This has led to the perfect conditions for investors to transition from traditional private equity to the more contemporaneous and potentially more lucrative model of search fund investing.
OUR COMPETITIVE ADVANTAGE
With the market for great SMBs becoming more competitive with Private Equity’s (PE) emerging involvement in the Lower Middle Market (LMM), driving up multiples, a searcher or independent sponsor that can negotiate a favorable structure to compete on price has a slight advantage.
As many of the sectors and technologies we invest in are technical and outside the scope of expertise of our in house team, we have a number of experts and industry specialists that we can reach out to in order to carry out more thorough and technical due diligence. Once the investment team has completed their due diligence with the assistance of our advisors and industry experts, the investment is presented to capital providers.