Changemaker Capital Search Fund

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.

Financial description

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%.