Guillermo Ochoa Signs LOI for Manufacturing Deal as Search Funds Near 900 in North America
Updated
Updated · NOLA.com · Aug 17
Guillermo Ochoa Signs LOI for Manufacturing Deal as Search Funds Near 900 in North America
1 articles · Updated · NOLA.com · Aug 17
Summary
Earlier this summer, Guillermo Ochoa signed a letter of intent to buy a manufacturing or industrial services company and is now in due diligence ahead of a possible October closing.
Ochoa, a Mexico City-born mechanical engineer and UCLA MBA, pursued about eight targets nationwide through New Orleans-based Search Fund Accelerator before reaching the agreement.
Search Fund Accelerator pays searchers' salaries, provides coaching and acquisition capital, and has built 19 ventures and completed 27 acquisitions; two portfolio companies are worth more than $100 million.
Nearly 900 funds now back searchers in North America, with more than 100 launched in the past three years as retiring baby boomers put over 1 million businesses on the market by 2035.
The model's popularity is rising despite roughly a 50% industry failure rate, helped by investor returns near 34% and payouts of nearly five dollars for every dollar invested.
Can the lucrative 35% returns of search funds survive as thousands of new buyers flood the market and drive up small business prices?
With acquisition success rates dropping below 50%, what happens to the elite MBA graduates who spend years searching but never buy a business?
As retiring boomers hand their life's work to young MBAs, do aggressive acquisition strategies actually destroy the legacy of stable family businesses?