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Entrepreneurship

Leadership

Helping entrepreneurs locate and take over businesses without succession plans

Published 29 October 2021 in Leadership • 5 min read

EMBA alumni are assisting a fellow alumna in achieving her aim of buying and running an existing company.

 

Vanessa Monestel (EMBA 2008) is no stranger to companies without a succession plan. In 2014, she became CEO of an independent Swiss watchmaker whose founder had no-one lined up to take over the reins and was tasked with preparing the company for a sale. She had turned the brand around when the owner backtracked and decided he no longer wanted to sell his business. 

Frustrated by this experience, Monestel was attracted to a program called Entrepreneurship Through Acquisition (ETA), which was set up by fellow IMD alumni Elena Trukhina and Christian Malek (EMBA 2018). The program acts as a kind of matchmaking service between investors and talented entrepreneurs who are looking to find, acquire, manage and grow a privately held company.  

ETA, also known as a search fund, dates to 1984 and is becoming an increasingly popular option for business school graduates looking to become CEO without having to climb up the corporate ladder or launch their own start-up. For investors, it provides an interesting opportunity to capitalize on the leadership potential of young entrepreneurs. 

An individual, known as the “searcher”, must first raise a pool of funds from a group of co-investors who cover the initial costs of seeking a company to acquire, including the searcher’s salary and any due diligence fees. This usually takes place over a period of up to two years. Once a company is located, the initial investors provide equity to acquire the business. The individual then becomes CEO with a mandate to grow the company and, in due course, provide an exit for the investors. 

“When you are part of a big corporation, even if the work is interesting and it’s a great environment, you still feel that you are just a number somewhere and not having a big impact on operations”
Vanessa Monestel

A record 88 search funds were launched in the US and Canada in 2018 and 2019, according to a 2020 study by the Center for Entrepreneurial Studies at Stanford Graduate School of Business. Since 1984, more than $1.4 billion of equity capital was invested in traditional search funds and their acquired companies. The aggregate pre-tax internal rate of return for investors was 32.6% through to the end of 2019. 

The concept is less developed outside of North America, but is growing in popularity, with 50 new international search funds raised in 2018 and 2019, of which just under half were in Europe. 

Instant impact 

Monestel, who spent 10 years working with large international clients in the retail and consumer goods industry as a consultant, discovered she was more interested in running a small-and-medium-sized enterprise (SME) during her EMBA at IMD in 2008. 

“When you are part of a big corporation, even if the work is interesting and it’s a great environment, you still feel that you are just a number somewhere and not having a big impact on operations,” she said. By gaining equity in a company, you really feel that you can change things and transform the organization, she explained. 

The program also taught her that she wasn’t interested in starting her own company. “During my EMBA, we went to visit a VC in California to present case. It was super interesting, but I didn’t feel I could leverage my skills and experience as much in a start-up as in a SME” 

 

First alumna 

Monestel is the first IMD alumna to be recruited onto the ETA program run by Novastone Capital Advisors (NCA), which was set up by Trukhina and Malek in 2019. Despite their similar backgrounds, there were no short-cuts and Monestel had to complete a rigorous selection process. 

“Vanessa has 20 years of experience and passion for operational excellence. She has the perseverance of an entrepreneur, and she really takes ownership of what she does,” said Trukhina, highlighting Monestel’s strength in pulling people around her into learning and improving.  

“Vanessa is a type of a leader that make things happen, and we are delighted to have her as part of the program and we will work together with her to help her on her entrepreneurial path.”  

Unlike her earlier experience with a privately owned company, Monestel said the program gave her security as there was a strong partnership with an investor from the start who also provided guidance and mentorship. 

Monestel is one of seven searchers in her cohort who are in the process of preparing their pitches to attract co-investors

Female searchers remain relatively underrepresented in search funds, accounting for just 7% of individuals that began searching in 2018 and 2019, according to the Stanford study. Just over a third of the entrepreneurs have a background in investment banking, finance, or private equity. 

Monestel is looking for a company to acquire in France or French-speaking Switzerland, where she is familiar with the regulatory environment. 

“It could be anything encompassing personal equipment, such as clothing and accessories, to home improvement,” she said. 

Monestel is one of seven searchers in her cohort who are in the process of preparing their pitches to attract co-investors who will help sustain them over the acquisition period. 

For potential sellers, she thinks part of the appeal of the NCA program is that entrepreneurs and investors come as a package: “They put together people with different backgrounds. It’s a way to have a complete offer to manage a company.” 

About

Vanessa Monestel

Vanessa Monestel started her career with Accenture as a consultant specialized in operational efficiency, serving big international clients in retail and consumer goods industries for 10 years.

After moving to Switzerland, she attended the IMD executive MBA, program during which she decided to shift from big corporations to SMEs. After graduation, she joined a small and medium-sized company operating a manufacture and a brand in the watchmaking industry.  

She was then approached by a young fine watchmaking brand in a challenging situation. She accepted to turn the company around, to make it profitable and prepare the exit.  

After this experience, she chose the Entrepreneur Through Aquisition program launched by Novastone capital Advisor to pursue her career.  

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