Is business succession by the search fund model an option for Central Europe?
Objective: Introduced in the 1980s in the USA, the search fund model as a niche financial instrument of entrepreneurship through acquisition has not yet become popular outside North America. This article responds to the question whether search fund could be an interesting model for Central European countries with an increase in business successions.
Research Design & Methods: A qualitative content analysis of interview data from eight cases from German-speaking countries allows analysing the context and experiences, as this is the region with the most cases of applications within Central Europe to date.
Findings: The results reveal the entrepreneurial intent of the searchers, the searcher’s confirmation of the theoretical advantages of the search fund model, and the low popularity of the model in the German-speaking markets due to scepticism and hindering factors like the criteria catalogue, market idiosyncrasies, competition of private market investors, and lower control of choosing and running a target company. Furthermore, these markets offer well-established financing alternatives which makes searchers choose alternative models.
Implications & Recommendations: Because the search fund model as niche model does not tap its full potential, a transfer of best practices between different regions in the world is beneficial. Moreover, platforms connecting successors, funders, and predecessors may be useful in this regard.
Contribution & Value Added: The study offers first empirical insights on adoption factors of the search fund model in German-speaking markets: in so doing, it sheds light on preferences and concerns of the parties involved, with the aim to facilitate the model’s future application all-over Central Europe.
Business succession; Search fund model; Entrepreneurship through acquisition
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