Each SFA cohort is backed by an equity fund of committed capital, and any additional equity capital required will be sourced from SFA’s investors, eliminating the need to shop a deal to dozens of investors, improving the searcher’s credibility, and giving confidence to the seller. SFA works alongside the searcher as he or she decides to acquire a business, following a collaborative process that is highly efficient and is geared to ensure the searcher’s success.
We ask each searcher to place a small portion of his or her equity in a common fund in exchange for a pro rata share of that fund, providing each searcher a small equity stake in every other deal in the cohort. The consequences of this are twofold: an economic incentive to help one another post-acquisition, and a more diversified personal investment.
Why do we do this? The concept of a “cohort” is important to us and to our searchers. The relationships they build at SFA are strong - very strong. Working in the same space for up to two years creates bonds that can last a lifetime and be leveraged once everyone is running a company.
SFA economics are advantageous to the searcher. The equity percentages are identical to the traditional funded-search model, but there are a few differences in our model that benefit the searcher. Additionally, SFA’s resources and support significantly increase the chances of finding a business to buy and managing it to a successful outcome. Therefore, the projected value of that equity is greater than in the traditional model.