NOW ACCEPTING APPLICATIONS FOR SUMMER 2021 COHORT!
Pursuant Search Partners
An incubator for self-funded searchers
Searching has a binary outcome: a searcher either buys a business or doesn’t. Using our experiences searching, closing and operating small businesses, we want to increase the probability of success for self-funded searchers by providing guidance, resources and access to funding – all while preserving the searcher’s majority ownership.
Who is a good fit?
Self-funded searchers (current and prospective) that are “financeable” by the SBA and targeting US-based businesses. The incubator will be especially beneficial for searchers with non-M&A leadership backgrounds (e.g., operations, military, consulting, etc.).
What do you get from the incubator?
The guidance and resources of Pursuant Capital, a search partner with vast experience sourcing, closing and operating small businesses; a 4-day, in-person “Bootcamp” to learn everything we know about searching, closing and transitioning; a dedicated “Deal Team” with searcher-friendly terms (SBA lender, Quality of Earnings, Legal, Insurance, Tax – names and bios to be announced soon – all will attend the Bootcamp); and access to equity investors with deep experience in self-funded search investing.
What does Pursuant get?
1.5% cash fee at closing; plus 2.5x step-up and 10% preferred dividend on any equity invested by Pursuant/affiliates (intent is $50,000 with option to provide all of the cash equity needed to close).
Example of 2.5x step-up:
$3MM purchase price with 90% total leverage (SBA + seller) = 10% equity injection ($300K).
If Pursuant invests $100K = 3.33% of gross purchase price x 2.5 step-up = 8.3% ownership.
If Pursuant invests the entire $300K = 10% of gross purchase price x 2.5 step-up = 25% ownership.
These equity percentages are very searcher-friendly compared to usual percentages that are determined by the percentage of the total equity injection the investor is making, not percentage of the purchase price (e.g., $100K is 33.3% of the equity injection but Pursuant is receiving only 8.3% ownership. $300K is 100% of the equity injection but Pursuant is receiving only 25% ownership.)
What do you keep?
Control over the search and acquired company; flexibility to operate as an owner/operator; no “free” equity to Pursuant; no out-of-pocket cost to join the incubator, attend the Bootcamp or access Pursuant’s Deal Team if you close on a business within two years; FMV compensation after closing.
Standard for self-funded transactions: $500,000+ SDE, minimum 10% seller note, purchase price multiple within normal range for industry and size, SBA loan used to fund 85%+ of the purchase price, engagement of Deal Team for transaction support. We will develop a broader checklist together.
The Bootcamp is a 4-day, intensive, in-person training course with Pursuant and its Deal Team. The target date is July 22-25, 2021 (backup: July 29 – August 1, 2021). The Bootcamp includes four full days of education and training (Click Here for Agenda), followed by after-hours dinner events. Food and beverage is included.
After the Bootcamp
After the Bootcamp, you will have a one-hour standing weekly call with Pursuant until you are under LOI, at which point we (you, Pursuant and Deal Team) will be “all hands on deck” to get your deal across the finish line and successfully transitioned. We are open to serving as an active advisory investor beyond closing/transition upon mutually agreeable terms.
Up Front Cost
After acceptance into the incubator, we require a $1,000 refundable deposit, returned in full at the closing of your transaction within two years.
Cohort of 3-7 searchers, Pursuant Capital, the Deal Team (SBA lender, Quality of Earnings, Legal, Insurance, Tax), and affiliated equity investors – all names and bios will be announced pre-Bootcamp.
Summer 2021 Cohort
The Summer 2021 Cohort will be announced by June 27, 2021. This group of 3-7 self-funded searchers will interact closely at the Bootcamp, and each searcher will agree to reserve 1% of his or her company’s equity for each of the other searchers in the cohort (option to invest – not mandatory – investment will be pari passu with Pursuant).