Our Fund Structure
Red Oak is set up as a search fund, a form of entrepreneurial single-acquisition private equity vehicle. The fund was set up with the objective of finding a single small to medium business with significant growth potential for Kuba Soltysiak, its founder, to operate as CEO.
All investors participating in the fund have paid an initial fee in order to cover the costs of searching for the right business and performing due diligence. They did so with the expectation that Kuba would personally operate the business post-acquisition, and that the company would fit within certain pre-agreed parameters. After the target is identified, we have an efficient approval process to confirm each investor's participation in the ultimate transaction and call the capital to close the acquisition.
The Market for Search Funds
While a fairly niche form of private equity, several hundred search funds with a similar structure as Red Oak operate across North America today, as well as around the world. What they have in common is that they almost always have one or two full-time operators, who aim to operate the acquired business post-acquisition, thus offering a succession plan and a financial exit for founders or current owner-operators. A community of investors who commonly back such search funds has emerged, many of who are investors in Red Oak (see our Investors page)
Why Sell to Red Oak?
There are several advantages to working with me compared with other potential buyers or successors for the business:
I can offer you an attractive valuation
I'm keeping the business independent, and not merging the company with any other, so I'll be keeping the team, the brand, and the systems you've built
I'm a growth investor, and aim to make investment returns by growing the acquired business in the long run; I'll be investing in it, not cutting costs
I'm joining the team on day one and working full-time on learning the business to transition into leading it; you have the flexibility to exit in as short as 3-6 months (depending on the time it takes to transition knowledge and relationships)
I've done this before, and my investors have done this before. We will move quickly and efficiently to close the deal we propose.
The Stanford Graduate School of Business publishes a primer as well as a regular study of search fund activity across North America. More info can be found on Stanford's website, or ask me and I can share more about my structure and the model in general.