Thinking about joining? Here's what you need to know.
What is Kindly Light and what is a Search Fund?
Kindly Light is a search fund founded and run by us, Mark Wang and Ben Westrick.
A search fund is an investment vehicle through which an entrepreneur raises capital from investors with the goal of acquiring a company in which they wish to take an active role in its day-to-day management.
Why wouldn’t I sell to Private Equity or a Strategic Acquirer if they’re offering more money?
When compared to private equity or search fund offers, strategic acquirers may sometimes be in a position to offer higher valuation for your company due to the obvious synergies between your company and the existing competitors (Redundant functions such as HR, Finance, Logistics, Warehouse, etc.). That said, given the constraints posed by the acquiring company, deal terms and timeframe for a closing are often more complex (a lot of contingencies) and lengthy.
Private equity funds have a reputation for aggressive negotiations when it comes to company valuations. Also, due to their typically shorter investment cycle (5-7 years) and the pressure to return capital to their limited partners, private equity are not considered patient investors and as such have often been accused of focusing their efforts on short-term financial performance rather than the long-term health and prosperity of the company and all of its stakeholders (i.e. shareholders as well as employees, suppliers, customers, etc.)
Search funds are a path to entrepreneurship in which former entrepreneurs and like-minded investors commit capital to an operator in order for him/her to acquire a business and grow it for the long-term. Since entrepreneurs are in for the long haul, search funds are more amenable to flexible terms tailored to the sellers’ unique situation as well as respectful approach towards the company’s legacy and what the founder’s have built over the years. In addition the transaction tends to be simpler, with a higher degree of flexibility and better overall alignment between the seller and the buyer of value and mission. Given the above, selling your company to a search fund is in many circumstances the ideal solution for generational changes in family run businesses as well as companies operating in small niche markets.
What are Mark and Ben’s plans after the acquisition?
One of our priorities is to find a company where we feel confident we can make a real difference in the long-term. Our plan is to build upon the legacy and unique business built by the original founders and managers, and leverage our 30+ years of combined experience in sales, business development and operations to grow the business to the next level.
We plan taking on an active leadership role in the day-by-day management of the company, based on the needs of the existing organization, management team, and in light of the opportunities and challenges faced by the company in the marketplace.
What will the current Owner/CEO role be after the acquisition?
While every owner decides to sell his or her company for different reasons, regardless of the above, it is our hope (but not a prerequisite) for the seller to continue working at the company for as long as necessary to ensure a successful transition. That said, since every sale is different, should different needs arise, we are keen to find the best possible arrangement for all parties involved.
When or why should a business owner consider an exit or succession planning?
Over the past 10 years, having spoken probably to several hundred business owners, these are the most common circumstances in which owners
Succession Planning:
When it comes to family owned business, very frequently your children have different plans for their own future and professional careers. In such circumstances, business owners might not have an heir interested in carrying on their family legacy. The general wisdom is to start to think about an exit sooner rather than later. This increases a seller’s chances to sell at the best time (i.e. when the company is growing and the market is strong), rather than delaying a sale and being rushed into it because of hard circumstances or age.
Retirement:
For most businesses, owners have worked really hard their lives to build their company. As such their desire to simply retire is understandable and, as for succession planning, should be planned well ahead of the expected retirement age.
Too Big:
A common cause for selling your company comes when a company has outgrown an owner’s ability to continue its growth. While it isn’t always easy for the founder to admit, many entrepreneurs (especially in technology heavy sectors) started their journey as inventors or scientists, as such they have a natural talent when it comes to starting a company from nothing based on a genius invention or new approach to an old problem. That said, they often lack the necessary training or or desire to manage a large organization. If that is the case, the sooner business owners recognize that the better they can plan their exit. Questions a business owner should ask to her/himself are: Has the company’s growth slowed in recent years when compared to the past? Do I enjoy my work less now than years back when I didn’t have to deal with so much administrative, HR and similar issues?
New Plans and Aspirations:
Successful entrepreneurs and business owners are by nature ambitious overachievers. As such, once they have reached their goals they start itching for a new or different challenge and life experience. This can be a new venture, spending more time with family or volunteering at a cause close to their hearts.
When it comes to selling your company, learning about the available options available, the related sales process and having a fair and realistic view of your company’s worth will ensure a successful sale, a smooth transition of the company into the new chapter in its life and the continuation of the company’s legacy and its owners’ lifetime work.
