Changemaker Capital Search Fund
United States of America
Last updated 13 May 2020, by Impactyield.
Developed countries (203) / More developed regions (202) / More developed regions (North America, Asia & Oceania) (153) / United States of America (112)
Changemaker Capital Partners is an impact-focused search fund, formed to identify, acquire and operate a company that addresses social or environmental causes through either its products, services or business practices. We are focused on stable, lower-middle market businesses seeking a management transition. The fund's limited partners are active in the investment process and include successful entrepreneurs, seasoned operators and private equity investors.
The search fund is an established structure that allows LPs to invest in small companies while mitigating some of the risks of investing in private equity funds. Through a two-stage process, investors have only a fraction of their capital at risk during the acquisition search phase. Once a target is found, due diligence is completed and deal terms are finalized, investors have the option, but not the obligation, to participate in the main investment round used to consummate the acquisition. Though search funds have been in existence since 1984 and over 200 search funds have been raised to date, Changemaker Capital believes it is the first search fund with an explicit focus on impact investing.
For business owners looking to transition or retire, we offer a unique alternative that allows the company to maintain an explicit commitment to its mission post-sale. This differentiates us from strictly financial buyers and from buyers that require management continuity.
Changemaker Capital Partners LLC seeks to generate attractive, risk-adjusted returns for our investors by investing in a stable, profitable company and creating value through its operations.
Search funds have traditionally focused on companies in large, growing industries with recurring revenues, stable cash flows, diversified customer bases, defensible products or services and low exposure to regulatory risk. Changemaker Capital will target acquisitions in which its cause-driven investment thesis intersects with criteria characteristic of the search fund model. There is noteworthy overlap between cause-related sectors and past search fund investments, especially in industries related to health care, education and environmental services.
More specifically, the fund will seek targets with at least $5M in revenue, $1M-$5M in EBITDA, EBITDA margins of at least 15%, at least 10 employees, and competent mid-level management that will stay with the company post-sale.
The fund anticipates using financial leverage to fund the acquisition and will target internal rates of return of at least 30%.
of track record
the year funded
Key performance indicators
Asset manager: Changemaker Capital Partners
Product track record: Fund has 10 years of track record
Target IRR: 30%
Committed Capital: 0 USD (US Dollar)
Target return category: Risk-adjusted market-rate of return
Fund domicile: United States of America
Style/Stage: Buy Out, Growth Stage, Late Stage
Inception year: 2013
Vintage year: 2013
Target region: Developed countries, More developed regions, More developed regions (North America, Asia & Oceania), United States of America
Target close date: 01/07/2013
Product term: No defined term; Approx. 4-8 years to liquidity
Assets under management: n.a.
Investment size: Min: 0; Max: 0; Avg: 0
Currency of investments: USD (US Dollar)
Currency for fund / product figures: USD (US Dollar)
Fund investments to date: 0
Fund investments to date exited or repaid: 0
Management fee: n.a.
Carried interest: n.a.
Hurdle rate: n.a.
GIIN Investors' Council Investment: No
Limited Partners / Investors: n.a.
Limited Partner / Investor Type: Family Office, Other Institutional Investors
Phone number: (919) 480-2050
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Changemaker Capital seeks to invest in business models that align impact with financial returns. Targets considered should present both the opportunity to generate attractive financial returns as well as to make a substantive impact on the social or environmental cause around which the business is based.
Potential targets undergo an impact evaluation in addition to financial due diligence. While we default to using existing IRIS definitions, impact metrics vary significantly based on the target company's business model. These may include job creation figures, greenhouse gas emissions, amounts of materials recycled or repurposed, employee satisfaction metrics, safety metrics, etc.
Changemaker Capital is seeking to develop a measured track record of social and environmental impact of the company. The fund may introduce new sustainability practices at the company to demonstrate increased impact over time.
Some recent investment opportunities that we have considered include:
• Energy efficiency and environmental products, services and technology
• Recycling, composting and waste-to-energy services
• Health care services, facilities and technology
• Education-related products & services
• Staffing, employment and job-related training services