{"id":1725,"date":"2025-06-25T01:08:06","date_gmt":"2025-06-25T01:08:06","guid":{"rendered":"https:\/\/handaldunaway.com\/?p=1725"},"modified":"2025-06-25T01:46:50","modified_gmt":"2025-06-25T01:46:50","slug":"athletes-search-funds-investors","status":"publish","type":"post","link":"https:\/\/handaldunaway.com\/pt\/athletes-search-funds-investors\/","title":{"rendered":"Athletes and Search Funds: A Match Made in Investment Heaven"},"content":{"rendered":"

Professional athletes’ name recognition and influence give them a unique opportunity to help build brands that bring in profits long after their playing career ends. The marketing appeal for companies is evident, with many big corporations striking branding deals with popular athletes and including them heavily in their advertising campaigns.<\/p>\n\n\n\n

The reality, though, is that the majority of athletes will likely not have a Nike shoe named after them, and only a few can be tapped for Super Bowl ads. Nevertheless, many athletes can still use their marketing power and recognition to bring value to businesses across the spectrum in a way that helps businesses differentiate themselves in a competitive market and helps athletes own significant equity in growing enterprises.<\/p>\n\n\n\n

Search Funds<\/strong>, a booming type of entrepreneurial venture, could very well provide that opportunity for athlete-investors and may prove a profitable addition to their investment portfolios.<\/p>\n\n\n\n

What Is a Search Fund?<\/strong><\/h4>\n\n\n\n

A search fund<\/strong> is an investment vehicle where an entrepreneur, often an MBA (graduate with Master of Business Administration), raises capital from investors to acquire a small-to-medium sized business with significant growth potential and scale it. The size of acquired enterprises varies, with a median enterprise value of ~$14.4M.<\/p>\n\n\n\n

\"Illustration
The search fund model follows four key stages: search, acquire, scale, and exit\u2014creating long-term value for investors and operators alike.<\/figcaption><\/figure>\n\n\n\n

Over 500 search funds have launched since 1984, with healthcare and consumer sectors being top targets. Unlike riskier venture capital-funded startups, these businesses\u2014think gym chains, service companies, or healthcare firms\u2014 typically have steady profits at acquisition, with the median EBITDA (Earnings Before Interest, Taxes, Depreciation & Amortization) at ~$3.8M\/year. The process roughly unfolds in four steps:<\/p>\n\n\n\n

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  1. Pesquisar<\/strong>: The entrepreneur spends 1\u20132 years finding an ideal acquisition target, with search costs funded by investors.<\/li>\n\n\n\n
  2. Acquisition<\/strong>: Investors fund the equity portion of purchase, the rest is financed by debt. They typically keep ~75% of the equity, with the entrepreneur keeping the remaining ~25% of equity, colloquially called “sweat equity”, as he or she is going to be actually running the company, not the investors.<\/li>\n\n\n\n
  3. Growth Phase<\/strong>: The entrepreneur runs the business, boosting profits through operational improvements, add-on acquisitions, and marketing know-how.<\/li>\n\n\n\n
  4. Exit<\/strong>: After 5\u20137 years, the businesses are typically sold, often to Private Equity firms, delivering returns for investors and the entrepreneur. Since 1984, search funds have averaged a 35.1% Annual Return (IRR)<\/strong> e a 4.5x Return on Investment (ROI)<\/strong>, according to a Stanford 2024 study on North American Search Funds.<\/strong><\/li>\n<\/ol>\n\n\n\n
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    \"Bar<\/figure>\n\n\n\n
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    Source: Stanford GSB Study on North American Search Funds (2024).<\/p>\n\n\n\n

    Why Athletes Are Perfect for Search Funds<\/strong><\/h4>\n\n\n\n

    Na Handal Dunaway<\/strong>, we view athletes as great potential investors for Search Funds given the numerous synergistic opportunities for athletes and searchers alike. Unlike typical investors (e.g., wealthy individuals or institutions), an athlete’s brand equity<\/strong>\u2014fame, trust, and fan-base\u2014can can help differentiate a business and boost their growth trajectory.<\/p>\n\n\n\n

    \"Split<\/figure>\n\n\n\n

    Some potential synergies:<\/strong><\/p>\n\n\n\n