The power of value propositions in search funds

Strategies for creating appeal and differentiating your fund

Welcome back. I took off posting last week to celebrate Independence Day and spend time with loved ones. I hope you had a chance to do the same, especially since every business owner appears to be on holiday for the next couple of weeks.

We will be continuing things today with a post on a search fund’s value proposition and my thoughts on how to create a compelling one that will differentiate you from other prospective buyers, including other searchers.

Before diving into today’s post, I’d like to welcome the dozens of new subscribers to the Maverick ETA community over the past couple of months. If you’ve made it to the newsletter and have subscribed, you likely know that I am a traditional searcher who’s leading a vertical software focused search.

I’ve been searching for a great business to buy over the past 15 months and have had numerous discussions with prospective searchers and peers who are also looking to buy great businesses. I’ve been grateful to make progress on a significant number of acquisition opportunities and excited for what’s to come with the remaining months in store for me.

Today, I will be putting back on my sales and marketing hat to discuss one of the most important elements of running a successful search process, along with my perspective on how to optimize your messaging for those moments when you’re getting peppered with questions from a business owner who wonders how a 30-year-old can successfully acquire and operate their business in a space with little to no prior experience. I will discuss the following topics:

• What’s a value proposition?

• Understanding seller priorities

• Ideal seller profiles

• Communicating the value proposition

What’s a value proposition?

Investopedia defines value proposition as, “the value a company promises to deliver to customers should they choose to buy their product.” What does that mean in the context of search funds and entrepreneurship through acquisition more broadly? 

In my own words, the search fund’s value proposition refers to the value the searcher (and broader search fund) promises to deliver to a business owner should they choose to sell their business to the entrepreneur and its investors. This value could be in the form of financial gain, personal fulfillment, or assurance of the business's future prosperity. 

In fact, this is often a common question I receive from owners all the time: “Why should I sell my business to you?”

Now, let’s look at that statement more closely. The business owner has their own objectives in mind with a sale that must benefit them. In most cases, they couldn't care less about where you went to school, who you worked for, or how great you are at Excel. How are you going to benefit them in taking over the business relative to other buyers?