Milestone Capital (Private Equity – Search Fund), Fall Internship - PE Analyst – Intern

Type of Internship: unpaid, remote internship
Length: 11+ weeks (flexible end date)
Background/current situation for a prospective student. 

LBO market in Russia is nascent, as there are almost no professional Private Equity funds that operate on the mid-market ($2-10M of EBITDA). At the same time, the generational shift is happening and many business owners would like to retire. Often times, they don’t have willing kids to pass their business onto and they operate in an industry where there are no strategic players doing acquisitions/roll-ups. Therefore, many business owners in Russia find it hard to sell their business. And so, we launched Milestone Capital search fund in January 2021: we seek a mid-market business to acquire in Russia. We are the first and only search fund in Russia.

To date, there have been roughly 700 search funds launched worldwide, with ~450 in the US & Canada, ~120 in Europe, ~100 in Latin America and ~30 in rest of the world. Search fund is a special type of private equity (PE) fund / entrepreneurial vehicle where an entrepreneur raises capital from ~10-20 investors (HNWI & funds of funds, often referred to as Limited Partners or LPs) in order to search for and acquire a business. We have 17 LPs from US, Germany, Spain, Switzerland, Israel and Russia. Our LPs are entrepreneurs, top managers, university professors and professional PE/VC investors (all can be googled, 11 profiles are public and are available on our website). For example, one of our investors is Enrique Fernandez, a long-time CEO of M.Video and its current Board Memebr.

Search funds over the past 35 years delivered IRR of ~30-35% and ROI of 5-10x, which is the highest in the alternative investments sector. Part of the reason of their excellent performance is due to them having very strict criteria for the business they look to acquire. The business that a generic search fund is to acquire must:
1) Have very stable source of revenue (aka recurring revenue). This is the most important criteria. Here you can read about it.
2) Be in a growing industry.
3) Have high EBITDA margins.
4) Have low customer concentration.

Our search fund has some specific criteria, you can read them here.

It is also desirable for a business to have low CAPEX, economies of scale and some entry barriers
(economic moats).

Over the course of our engagement, you will:
1) Identify suitable industries for an outreach and do top-down analysis of industry verticals
via Interfax Spark;
2) Search for specific targets to reach out to;
3) Conduct analyses on targets (financial, ownership, general);
v4) Research contact information & work in databases;
5) Perform weekly review of CIMs/teasers, financial information and evaluate specific, real companies;
6) If desired, do some special tasks (
7) Look out for M&A business brokers / investment banks.

Goal: Build outreach pipeline with high-quality potential businesses to acquire. If we’re lucky, we might go under LOI & through due diligence within the time of our engagement.

Student Timeframe:
  1. Intro and training. First & second weeks of our engagement would be mostly dedicated to
2.Work cadence. Daily 15-minute stand-ups, Monday weekly goal-setting meetings, Friday
CIM (confidential information memo) reviews.
3.Mentorship & training. Regular 1:1 coaching meetings to help you with your career growth
(outside of Milestone Capital).

How to prepare for the interview: 

Please, screen through some or all of the below-mentioned materials. This would help you understand a bit better what a search fund is and what would be expected of you.

1) Stanford GSB. 2020 Search Fund Study: Selected Observations. https://www.gsb.stanford.edu/faculty-research/case-studies/2020-search-fund-study- selected-observations

2) IESE Business School. International Search Funds – 2020. Selected observations.https://media.iese.edu/research/pdfs/ST-0603- E.pdf?_ga=2.79102932.1920790741.1610981816-730221182.1610981816

3) Yale SOM. On the nature of revenue (here recurring revenue is explained, highly recommend to read before applying) https://yale.app.box.com/s/2tx5o79dxjz3t5lvjexgoidg9ci2neyy

4) Good blogpost. The Most Exciting Asset Class in Private Equity? Search Funds from the Investor’s Perspective https://www.toptal.com/finance/private-equity-consultants/search- fund-investor

Project Contact: Georgyi Vekhov available at georgyi.vekhov@milestone-capital.ru and at https://www.linkedin.com/in/georgyi-vekhov

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