TAEF has launched with Slah KOOLI an innovative investment mechanism, the Tunisian American Search Fund (TASF) operating in the large cap SMEs investment focus of TAEF.
The Search Fund model, conceived in 1983 by Dr. Irving Grousbeck professor at Harvard Business School (“HBS”), is a vehicle through which investors financially support an entrepreneur’s efforts to locate, acquire, manage, and grow a privately held company.
The search fund process consists of up to five stages: Raising and structuring Search Capital, Search for acquisition, Raise acquisition capital and close transaction, Operation and value creation and Exit.
In exchange for the initial Search capital, the investors receive (1) the right of first refusal to participate in financing (totally or partially) the company acquisition, (2) the right to convert the Search capital into equity of the acquired company stepped-up. The Step-up is meant to compensate the initial investors for taking on early-stage risk of the search. The manager will earn percent of equity stake in the company for identifying and acquiring the target company and for achieving agreed upon operating results. Portion of this equity will be subject to meeting pre-established investors returns.
Particularly adapted to solve the succession problems, the Search Fund model offers a unique opportunity for business owners looking to retire, to move on for new venture or seeking for liquidity. The Manager will focus on growing the business and will be fully dedicated to its ongoing success and upholding the values and spirit of its culture and legacy.
Search fund model is a typical tool for the development of the entrepreneurship through acquisition. The model aligns the interests of investors, entrepreneurs and business owners.
Both convinced that succession and takeover of companies are a major issue of national interest, TAEF and Slah KOOLI has decided to launch TASF, first Search Fund to operate in Tunisia. For this first experience, TAEF has decided to support the initiative and to be the sole sponsor of TASF for the search phase.
Our common objective with Slah Kooli, the entrepreneur – manager of TASF, is to identify, structure, acquire and operate an existing private company in Tunisia with initial enterprise value between TND 20.0 and TND 40.0 million, focusing on long-term growth. The search phase started in May 2017 for period up to 18 months.
Our objective is to be able to contribute to the development of this innovative and impacting investment mechanism in Tunisia by proposing our support for the setting up and financing of other Search Funds launched by other entrepreneurs.