The CEO Fast Track

Very interesting.... (ideas, ideas...)

The CEO Fast Track: " could be copied by anyone with access to investors and deep industry knowledge. 'The funds have a proven track record of helping young entrepreneurs take the helm of operating companies,' says Jim Ellis, a lecturer in management at Stanford who mentors many searchers.

The search fund model is straightforward: Searchers tap their networks to raise about $200,000 to $400,000 in first-round funding. That money supports them as they comb fragmented industries -- such as trucking, waste management, and sprinkler systems companies -- hoping to find businesses in the $5 million to $20 million range that have sticky succession issues but solid growth prospects. When they find a good candidate, searchers go back to their investors for a second round of financing that will enable them to buy the company. A 2005 study by Stanford's Center for Entrepreneurial Studies found that the funds had an average annualized rate of return of 37.3%.

The promise of high returns makes finding investors the easy part. Landing a company that is profitable, growing, and has an aging founder willing to sell to a couple of fresh-faced MBAs is much trickier. Deals often collapse near the finish line. Many searchers make bids only to find bogus financials or CEOs with cold feet. Rich Kelley, a principal at private-equity firm Search Fund Partners in Menlo "