About a year and a half ago, when Nick Akers began an effort to buy a business, he wasn’t familiar with the “search fund” concept.
“At that time, I had never heard of the term search fund. I was just trying to figure out how to potentially buy an existing business,” he said.
Traditionally, search funds involve aspiring entrepreneurs seeking capital to fund their search for a company to acquire and operate. The appeal to investors is that, typically, they would get the option to participate in the deal if one results from the fund.
Akers shifted his focus to the search fund concept. In doing so, he has been accepted into the Entrepreneurship Through Acquisition program of Swiss-based Novastone Capital Advisors, which provides both funding and guidance for people seeking to make an acquisition.
Entrepreneurship isn’t a new venture for Akers. In 2003, he founded enzyme technology startup Akermin Inc., which was spun out from research Akers had done as a graduate student at Saint Louis University. From 2018 to 2020, he was an entrepreneur in residence with St. Louis startup creator and investor BioGenerator, serving as president of Arch Innotek and Gateway Biotechnology. Before that, he was a managing director at St. Louis-based Jost Chemical Co.
Akers began his search through Novastone’s program at the beginning of 2021. He describes Novastone’s model as a “blend of private equity and search funds,” saying the program’s focus on working with experienced professionals allows for pursuing larger acquisition targets than a typical search fund. Novastone’s website says its entrepreneurs seek out companies with estimated values of 10 million to 35 million Euros, or roughly $10.5 million to $37 million in U.S. dollars.
With his background in St. Louis, Akers says ideally he’d like to find a local company to buy. His search is focused on finding a business-to-business manufacturer.
“That’s where the strong part of my background has been with some really good accomplishments and I feel like I could jump into those situations pretty quick and easy,” he said.
Akers said he has contacted business owners, business brokers, accountants and lawyers to source potential acquisition targets. His search has a 24-month timeline and Akers said he’s hopeful a deal could develop in the coming months.
“It’s very common for search funds to be successful at about the 18-month mark. It just kind of takes that amount of time to get all the pieces working together and pull off an acquisition,” he said.
Akers declined to provide a specific figure he has raised for his search, but said investor-backed search funds like his typically raise between $500,000 to $750,000. He said investors in his fund include Novastone, himself and and U.S.-based and international family offices.
While he previously launched his own company and worked at others in their early stages, Akers said he believes his career experience would suggest the best outcome is to manage an existing business and build upon its success. He added he’s drawn to entrepreneurship-through-acquisition for how it provides both liquidity and a next generation of leadership for a founder or family-led business.
“In essence, they are interviewing me not only as the potential buyer but also the future CEO," he said. "This is for the owner that cares about their legacy."
