Ryan Turk T’20 has long had a passion for search funds. “It’s why I came to business school,” he says.
But he noticed that his classmates either didn’t know what a search fund was, or didn’t share his same excitement on the topic.
That’s why he decided to launch his own speaker series dedicated entirely to the topic. Launched this fall, the Search Fund speaker series combines guest speakers and coursework to teach fellow students about the entrepreneurial phenomenon of Search Funds and Entrepreneurship through Acquisition, also known as ETA.
“I felt strongly that we should shoot for the stars, and expose as many students as possible,” says Turk, who created the series as an Ayres Private Equity fellow through the Center for Private Equity and Venture Capital (CPEVC), also enlisting the help of fellow student Jim Prial T’20.
Prial says he came to business school to develop his skills both as an investor and as an operator. “The search fund model requires performance in both roles,” he says. “That challenge along with the responsibility inherent in leading people was what got me so interested in search funds.”
So, what actually is a search fund? Simply put, it’s an investment fund an entrepreneur uses to raise capital in order to search for a company to acquire and run as CEO. “It may be that the founder is retiring, or the company has grown beyond their capability,” Turk says. “You arrive as someone to buy the business and shepherd it into the next phase.”
Done right, the fund can be a net win for everyone, taking a company to the next level and making money for the searcher and their investors. “It’s common for the CEO to earn up to 25 percent ownership,” says Turk. “You sell for $100 million, and now you are a 40-year old with over $20 million.”
Turk learned about the idea of search funds, first proposed by Stanford professor Irv Grousbeck in the 1980s, while he was a submarine officer in the Navy. Looking to enter the private sector, Turk wanted the autonomy of running a business, but didn’t have an idea for a company to start himself. “I wanted to maintain a lot of the leadership aspects of my job, which I really enjoyed,” says Turk, who is working to create his own search fund in either the dental space or industrial software industry.
Student fellows at CPEVC are required to complete a research project during their yearlong fellowship. These projects have become increasingly ambitious, says executive director Jim Feuille D’79. Last year, two Venture Capital fellows, Rachel Baras T’19 and Matt Baer T’19, organized a three-day online AgTech conference. “The idea of the center is to develop co-curricular programming that allows students to dive deeper into their areas of interest,” Feuille says. “We may not have 50 students who want to take a search fund class, but we may have 13 students who want to take a deep dive into it.”
Turk and Prial organized the seminar series on two tracks. The first track included eight public seminars this fall, with veterans from the industry—often graduates of Tuck themselves. They talked about all aspects of the search fund process, from identifying industries and assessing opportunities to transitioning to the CEO role. These public sessions, held during the lunch hour and open to all Tuck students, were very well-attended, says Turk, with 25 to 40 students at each talk. In addition to the eight sessions focused on specific topics within the search fund and entrepreneurship path, the center hosted representatives of three search funds to present their investment strategies and talk about recent trends in the industry.
For students more serious about going into search funds themselves, Turk and Prial enlisted the support of Steve Kahl, Center for Entrepreneurship Faculty Director, Daniella Reichstetter, Center for Entrepreneurship Executive Director, and Jim Feuille, CPEVC Executive Director, to develop and organize a more intensive second program track, in which students committed to attending all eight sessions. They also completed 35 hours of outside reading and three deliverables—a Private Placement Memorandum (PPM) to send to potential investors in their search, a research paper on a burning question about search funds and ETA, and a self-reflection paper on their learnings through the Search Fund Seminar Series and associated work. “Next year, when the next crop of students have the same questions, there will be a library of new papers written by this year’s students where next year’s students can find answers developed by this year’s students,” Turk says.
The goal is to take a Tuck student who doesn’t know a lot about search funds, and by the end, get them to a position where they are fully equipped and fully networked to go out and start a fund.
The 13 students participating in the second program track also held smaller workshop-oriented sessions with a combination of Kahl, Feuille, and Reichstetter, including networking with speakers during office hours and small group dinners. As many of the visiting speakers are now search fund investors themselves, they were able to meet Tuck students who may start their own funds in the future. Turk hopes that the groundwork he and Prial set may eventually lead to a course in search funds at Tuck. Due to some of the more unique aspects of the program developed by Turk and Prial, they took the concept to a level beyond that of other schools’ curricula. “The goal is to take a Tuck student who doesn’t know a lot about search funds, and by the end, get them to a position where they are fully equipped and fully networked to go out and start a fund—whether immediately upon graduation as I would like to do, or after several years of additional management training in another operating company as other searchers do,” says Turk. “That’s my dream.”