Finding a Buyer Who Values Your Legacy

The episode unpacks the mechanics of traditional search funds, where investors back aspiring CEOs to acquire lower‑middle‑market businesses. Moonbase Capital’s Ibrahim Abdel Rahim explains that target companies typically generate €1‑5 million in EBITDA—roughly $1.1‑$5.5 million—and are bought for a multiple of three to seven times EBITDA, yielding enterprise values of €3‑15 million (about $3.3‑$16.5 million). Deals are financed about half by banks, while the equity slice is spread across 10‑20 investors, each holding no more than 15 % to preserve entrepreneurial control. The model has expanded from Europe to Brazil, Mexico, Singapore, China and India.

Searcher demographics shape deal outcomes. Most candidates are 30‑40‑year‑old MBA graduates from top schools, split between ex‑consultants/private‑equity professionals and seasoned operators. Abdel Rahim favors operators who combine hands‑on management experience with some advisory background, arguing they connect better with founders and excel once the acquisition closes. Duos are common because they provide mutual support and mitigate risk, though they can bring interpersonal friction. Investors look for strong interpersonal skills, demonstrated initiative, and at least one area of deep expertise—finance, sales, or operations—to ensure the duo can navigate due diligence and post‑closing growth.

The search phase itself costs €500‑€700 k (approximately $550‑$770 k) over two years, split evenly between salaries and expenses such as legal fees, travel and office setup. Searchers generate thousands of cold outreach emails, leverage proprietary databases, and may enlist brokers depending on geography; the UK relies heavily on brokers, while Spain favors proprietary deals. For sellers, understanding this process is crucial: a well‑funded, disciplined search fund can move quickly, offer flexible terms, and preserve the owner’s legacy. Abdel Rahim stresses that aligning on size, industry‑agnostic criteria and founder rapport drives successful exits.