1. Outsourced Private Equity

2. Search Fund Historical Performance1
Search Fund Overview
Principia Capital (Principia) is a search fund formed by Bryan Luce to identify, acquire and operate an existing private company with initial enterprise value between $5 and $20 million.
The purpose of the search fund is to provide investors with the opportunity to participate in the staged financing of the search for and acquisition of an existing private company.
Search Fund Historical Performance1
Search Fund Facts
ROI
IRR
10.0x
34.9%
2.3x
23.4%
Asset class since 1984
Entrepreneurship through acquisition core MBA curriculum
Rice, Stanford, Harvard
All search funds
Removing five best performing funds*
*134 eligible funds - fund raised that acquired a company or shut-down fund; 117 included in calculation (8 removed as operating less than one year, 9 removed due to insufficient data); ROI & IRR are aggregate pre-tax

3. Quality Evaluation Dimensions
Search Criteria
Acquisition screening criteria:
Sound reasoning for sale (management transition, absentee owner, retirement)
Privately-held and based in the U.S.
Three year history of profitable operations
Revenue between $5MM and $50 MM
Minimum EBITDA margin of 15%
Minimum annual EBITDA of $1.5 MM
Likelihood for geographical, product/service expansion (including adjacencies)
Recurring revenue critical search criteria component
Quality Evaluation Dimensions
People
Seller(s)
Middle management
Employee base
Customer, suppliers
Industry
Size, growth and stability of primary demand
Fragmented
Threat of external shocks
Cash Flows
Recurring
High margin, growing
Diverse (customer, products, markets)
Low seasonal, cyclical risk
Market Position
Defensibility
High switching costs
Competitive advantage
Operations
Simple, transferrable
Returns on invested capital
Improvable
Liquidity Options
Ability to generate 35% compound annual return on investor capital

4. Search Stages & Timeline
Stage Time
Stage 1: Raise the Search Fund
2 – 4 months
Stage 2: Source & Evaluate Opportunities
1 – 24 months
Stage 3: Finance & Close a Transaction
2 – 6 months
Stage 4: Operate the Business
4 to 6 years
Stage 5: Exit the Business
4 – 6 months
On average, transactions are completed within 19 months

6. LP Operations Update