A search fund CEO takes over a consumer goods company on day one, with a sales team built around the previous owner. The first year decides whether the commercial plan ever starts.
What a search fund CEO inherits
A searcher spends months finding the company and then becomes its chief executive at closing. The sales team was built around the founder’s relationships, and the customers know the founder better than they know the new CEO.
Searchers often come from finance or consulting. They read a balance sheet well, but the commercial side of a consumer business is new to them.
Investors add pressure. They expect visible progress well before the numbers can show it. In this kind of deal, the investors are many and small, and they want to see the plan working long before the sales figures prove it.
Why the commercial knowledge has to come from outside
An M&A adviser who works mainly with corporate buyers describes the usual pattern. In most acquisitions, the existing general manager stays for the first year. The new owner keeps that person because the commercial knowledge sits there.
In a search fund deal, the searcher steps into that role. Therefore, the commercial knowledge has to come from somewhere else: an adviser, a strong commercial director or an experienced board member.
The same 12 to 18 months apply
Commercial results take a year to a year and a half to arrive. We explain why in our piece on the 12 to 18 month timeline. New hires need months before they sell, and listings follow the season.
The searcher faces this clock with a particular handicap. None of the investors follows operations. Nobody outside the company can tell the CEO early that the plan is slipping. Our piece on the private equity operating partner describes the same gap in larger funds.
Search fund CEO: three moves for the first months
First, map the customers and the sales team. List the main customers, who holds each relationship, and which reps have opened new accounts in the last two years. The founder’s relationships are an asset only when someone else can hold them.
Second, agree a small number of early indicators with the investors. Choose commercial ones that move before sales do, such as new customers opened, distributors signed and first repeat orders. Investors then see progress months before the numbers show it.
Third, fix a review rhythm with the commercial team. A regular review forces the team to show what it did since the last one. The FMCG Growth Sprint is built for the first year after a change of ownership, which includes a search fund acquisition. It starts with a market visit and an assessment of the sales team. It also fixes the indicators and the review calendar in the first 60 days.
The CEO who does these three things in the first quarter has something to tell investors in month six. The CEO who does not has only the founder’s old numbers.
Frequently asked questions
What does a search fund CEO do in the first year?
The CEO maps the customers and the sales team. The CEO also agrees early indicators with investors and sets a review rhythm with the commercial team.
Why is the first year harder for a searcher than for a corporate buyer?
In most acquisitions the existing general manager stays for the first year. In a search fund deal the searcher takes that role, so the commercial knowledge must come from elsewhere.
How long do commercial results take after a search fund acquisition?
Plan for 12 to 18 months, depending on the sales cycle.
Which early indicators can a search fund CEO share with investors?
New customers opened, distributors signed and first repeat orders move months before sales do.
To see how the first year after a deal can be organised, read about the FMCG Growth Sprint.
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