In the first stage, a small group of investors back operating managers to search for a target company to acquire which can often take 2 to 6 months. Investors are able to invest a
pro-rata share in the target company, subject to their individual liking. A fund may or may not find a target
acquisition company through this second stage process which typically spans 1 to 2 years. In the third stage, assuming the searcher was able to find a company to acquire, they take on operating roles in the acquired company, such as CEO and President. They continue in these roles for around 4 to 7 years and attempt to create value. Finally, the last stage of the model, the exit takes around 6 months while searchers look to sell the company they once bought. Traditional search funds typically target companies in the $5 million to $50 million price range, requiring $2 million to $10 million of
equity capital, in fragmented industries with sustainable market positions, histories of stable cash flows, and long-term opportunities for improvement and growth. Self-funded search funds generally target businesses less than $5 million. Service and light manufacturing companies outside high-tech industries are popular targets. Often these companies are under-managed prior to the acquisition. Most search funds are started by entrepreneurs with limited operational experience and possibly no direct experience in the target industry. The goal of the investor is to place promising, motivated managers in an environment with a high probability for success given the oversight and experience of the investors themselves. This model offers less risk than starting a company from scratch since the business already has customers, revenue, and a stake in the market. == Internships ==