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Today’s Rundown

• Prerequisites of bank for partnering with search funds

• Continuation funds as exit strategy for search funds

• TEMBO SEARCH PARTNERS announced their newest entrepreneurial successor

• 4 deal announcements (1 search fund acquisition)

• 7 career opportunities

📣 New Mittelstand Summit 25, an exclusive and invite-only search fund event, take places on May 20th in Berlin - register here!

Weekly Highlights

• Stephen Emerson and insidermedia published an article on what banks look for when it comes to search funds:

  • In general, debt facilities typically range from £3m to £50m, with a sweet spot between £3m and £10m

  • Banks like Shawbrook finance search funds using cash flow lending, asset-based lending (ABL), or a mix of both

  • Structures such as loans with amortising and bullet debt to provide repayment flexibility (e.g., a £5m loan split into £3m amortising over five years and £2m bullet debt) are quite common

  • Lenders assess whether the searcher, investors, and vendors share risk and are aligned for long-term success; a meaningful equity contribution is expected from both the searcher and investors

  • Target business fundamentals include:

    • Strong EBITDA performance and cash conversion are crucial

    • Businesses with recurring revenues, cost-efficiency opportunities, or growth potential via M&A are preferred

    • A well-established finance function with a strong Finance Director is essential

  • Target searcher profile include:

    • Searchers with industry experience, a clear strategic plan, and strong financial acumen are critical

    • M&A professionals with knowledge of business fundamentals and due diligence are highly regarded

  • Target investor profile includes:

    • Banks assess if the searcher has invested personal capital and whether the investor pool includes a mix of institutional investors and family offices

    • Investors must demonstrate capacity for follow-on funding to support business growth or cash flow needs

    • Cornerstone institutional investors are preferred due to their ability to provide additional capital

• José Moreno, managing partner at search fund investor AIJ Global, shared his thoughts on continuation funds as a smart exit strategy for search funds:

  • Once seen as a niche strategy, continuation funds are now widely used across the private equity industry:

    • They allow investors to extend ownership over high-performing assets while providing liquidity options to existing stakeholders

    • Over 80% of the top 100 GPs have already engaged in the continuation fund market

    • GP-led secondary transactions hit $28 billion in the first half of 2024, reinforcing that continuation funds are here to stay

  • For search fund entrepreneurs, this evolution opens up a valuable opportunity - providing a strategic path to extend ownership, grow thriving businesses, and maximize investor returns without the pressure of an early exit

  • Traditionally, search fund entrepreneurs grow businesses and exit via strategic sales or PE buyouts; continuation funds allow them to keep control, scale further, and bring in fresh capital without selling outright

  • High interest rates and economic uncertainty have made traditional exits (strategic sales, IPOs) more challenging; continuation funds provide a bridge, allowing firms to ride out market fluctuations while maintaining control

• TEMBO SEARCH PARTNERS, a search fund investor led by Benedikt von Hatzfeldt and Christian Gieger, announced their newest entrepreneurial successor:

  • Hermann Finkeldei, an experienced operator (e.g. Bain, Flink, Medwing), joined as an entrepreneurial successor and begins his search for a mid-sized company in Germany, focused on BPO, IT Service and TIC

Deal Announcements

• 🇪🇸 Albor Capital, Ramón Martín’s search fund vehicle, acquired Manufacturas Deportivas (MD), a company focused on the designing, manufacturing, and, assembling of street furniture, playgrounds and sports equipment (link)

• 🇩🇪 Waterland, a mid-cap private equity firm, acquired NETCONOMY, one of Europe’s top SAP Customer Experience (CX) experts (link)

• 🇩🇪 Timegrip, a Main Capital Partners asset and software vendor of workforce management, acquired Software4You, a SaaS for HR controlling and personnel cost planning software (link)

• 🇪🇸 Ayesa Engineering, a A&M Capital Europe asset and provider of technological and engineering services, acquired ADP Consulting, a sustainability-led engineering consultancy (link)

Career Opportunities

• [PE Asset] Corporate Development / M&A Manager | The Relevance Group | Hamburg (apply)

• [PE Asset] M&A Manager | PER | Munich (apply)*

• [PE] Investment Associate | ACL Partners | Munich (apply)*

• [PE] Investment Associate | Thomas Ren Associates | Munich (apply)*

• [PE] (Senior) Associate Sourcing Team | PER | London (apply)*

• [PE] Investment Intern | PER | London (apply)*

_*Headhunter

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