4min chapter

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Launch Series Ep.2: Search Startup with Nikita Sunilkumar and Alex Thinath - Ep.174

Think Like an Owner

CHAPTER

How to Draft a PPM for Investors

We'd love to hear more about constructing a PPM and what specific sections maybe searchers should pay the most attention to or think the most about. The things we look for are really the searchers background. They're biography effectively and their resume, their industry thesis work. And then finally we look for kind of the surrounding detail on how they intend to approach their search.

00:00
Speaker 3
And so turning into drafting a PPM, you mentioned before, a couple components are fairly standard, but we'd love to hear more about constructing a PPM and what specific sections maybe searchers should pay the most attention to or think the most about.
Speaker 1
I will take this again in terms of just the quick things that we look at, you know, there's certainly some sections that are fairly boilerplate and they're intended for investors that are not familiar with the search model. So, you know, it's pretty common to include kind of a primer on what searches and how it works and all that. That's all, that's all pretty standard. The things we look for are really the searchers background. They're biography effectively and their resume, their industry thesis work. And then finally we look for kind of the surrounding detail on how they intend to approach their search. And this could be anything from, you know, very, very specifically, I intend to spend this much time looking at broker deals, where I intend to focus on this geography or I intend to have 100 interns. I don't know, being being facetious, but really the parts of the PPM that will tell us what is this person actually going to go do once they launch their search is really helpful. Again, going back to an earlier point, you want to have alignment between all of those three things and you want to show that narrative of, hey, this is my background, it's going to inform which industries I'm searching in. This is the reason I like this industry and this is sort of the context around why I think it's a good opportunity. And then finally, this is how I intend to approach the search to make my chances of acquiring something in this space, you know, the highest possible chance. So, all of those things have components that will inform each other and we're looking for those threads to kind of connect. Sometimes it's clear people will come to us from a particular background, but they want to search in something completely different. And that's fine, but I think you kind of want to acknowledge that and speak to why you think you can bridge that gap and what specifically you're going to do to build credibility amongst other investors and sellers and so on. Yes,
Speaker 2
a few things that I'll add on to Nikita's comments here, geography and any kind of geography focus. It's a basic one, but you have to have it figured out. This goes back to talking with your spouse or partner around what could work. There's a lot of companies where you have to be in person and it's just a part of the culture and the founders will often just ask you, hey, so this is going great. Are you going to move here? And here could be any number of places that you're probably not expecting. So good to have that figured out. Another broad focus on, hey, what I do, services, healthcare, tech-enabled services, software businesses, even just understanding if you would do all of those, would you focus on anyone. That will also, frankly, just help you a lot as well in figuring out where you want to focus your search. And that should be clear in the PPM. This last one, I think it goes into the partly ties into how you want to build your cap table, but would you look at more, call it, growthy companies versus filling in white space where that is the key bet of what you're looking for. Your investors are probably going to have different philosophies on which of those they prefer. And then it will probably come down to the idiosyncrasies of whatever company you're talking to or working with, but just having a perspective there is useful.

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