Coffee Break with Mansour Afshoon, founder of Benelux Succession Capital

On behalf of BSPEC, I would like to thank you for accepting our informal invitation to this “Coffee Break with”. Would you present yourself with a brief overview of your professional and academic background?

My name is Mansour Afshoon and I’m the Founder and Managing Director of Benelux Succession Capital. I studied Economics at the University of Louvain. After graduation, I worked for Exxon Mobil for three years as a statistician. After three years I moved to the trading department, working with various oil products, buying and selling in the international oil market. It was great fun. Then, I wanted to have more international experience and I went to work with one of my clients, a Swiss commodity trading firm. I went to South Africa and covered the West African market in commodity trading. Initially I took on a commercial role, then an operational role, then on in finance, and then the role as country manager for the West African countries. I had the best two years of my life.

Later, I moved back to Europe, continued working in the commodity trading market, covering different markets. Gradually, I was realizing that this was not the career I was aspiring for. I wanted to be an entrepreneur since I was young and figured I had to take action.

I decided to go back to school and did an Executive MBA at INSEAD. During that time, I learned about Private Equity and the Search Fund model. When I finished my MBA, I started raising funds for my own Search Fund. It took 9 months and I eventually got a group of 19 investors behind me. Since then, we (including a group of fantastic interns) are searching for a company to acquire.

With regards to your professional and academic experiences, in your opinion, which are the ones that have helped you to now manage a search fund?

“The more you learn, the more you realize you don’t know anything”.

The best lesson I got out of my MBA is that we get a view of what is happening in the world, but I don’t consider myself an expert in anything. Even in Commodity Trading, where I worked for a long time. We always need to rely on the expertise of other people. I don’t mind telling people I don’t know something. I don’t mind surrounding myself with great people.

When did you get interested in search funds? What made you decide to take the risk?

I wanted to find my way to entrepreneurship, but I didn’t know how. I saw two ways to do it:

First, found a start-up – a very romantic path, as 90% of these firms don’t survive the first 3 years. Second, through acquisition – instead of starting from scratch, you buy the company and become the CEO. The company has already survived its first years and is already profitable.

To buy a company however, it easily requires millions of dollars. I did not have that kind of money myself. Therefore, I needed to find a model that would allow me to do that and surround myself with people in other domains. In the search fund model, I found the required expertise and capital. As a Search Fund, we were the first one in Benelux.

In which phase of the search fund lifecycle is Benelux Succession Capital at the moment?

Generally, there are four stages in the life of a search fund:

First, fundraising which took us 9 months. Usually, it takes about 3-6 months. Second, search for a company to acquire. We are 9 months into that period which usually takes about 2 years. Third, running the company which usually lasts between 5 and 7 years. It depends however on the appetite of the entrepreneur. I see myself doing it for a longer period of time. Why? Because I am doing it without wanting to make a quick win out of it, I am doing it because I want to be an entrepreneurship. Last is the exit, as private investors want to cash out at some point.

Which are the criteria you use to select a target company?  

For us, there are three crucial ones. First is growth in the respective industry. We target industries with more than 10% growth per annum. Second, recurring revenues of above 70%, which means that over 70% of the revenue should come from the same customers as in the previous year. Third, a combination of high margins and low cost. We look for an EBITDA margin above 15% and low levels of CAPEX. That being said, there is still a lot of room for errors. If you buy a company that fulfills these criteria, you can still make mistakes.

What makes Benelux Succession Capital unique? How do the operations differ from other search funds?

We are the first search fund in Benelux. Compared to other search funds that operate globally, I wouldn’t say that we are that unique. We utilize the search fund model to find success. We utilize fantastic interns in that process. The process allows us to bring on board great interns and train them fast, make them part of the operations and utilize their skills to advance our own success.

“Our interns are running the company.”

We designed the search process in such a way that our interns have responsibilities. They hire and train each other and investigate firms. It allows us to scale a lot. We use more interns than other search funds. We are also very cost conscious, operate in a very lean way without this impacting our results negatively.

What is the impact of Covid-19 on the search fund industry and on the operations side?

Suddenly we had to work from home, we did not know how to do this, and therefore designed our own process to start working online. This actually allowed us to expand even further. Indeed, pre-Covid, 5 interns would have been the maximum. On top of that we could have only hired interns from Leuven, or around this area. At the moment we have interns from around the world, which allows us to scale and expand faster.

The second thing I would like to mention is that we are on the buy-side. When you are on the buy-side in a crisis, it is, generally speaking, a good place to be. What has happened especially to the world of small and medium sized enterprises is that first of all there was a price impact. Of course, we hope that prices will go down, in reality however we see that great companies keep their value. Yet before the crisis we were seeing an increase in multiples and so an increase in purchasing prices. That trend has come to a hold. Companies are not becoming more expensive. In addition, there are more owners who contemplate selling their businesses. It is a new world, an owner who worked for 20-30 years in the physical world, and from one day to the other he needs to switch to remote working and thus they might be more willing to step aside to let a new generation run this world.

What is the future potential of search funds?

I think it is a fantastic model, even for students like yourselves. For a very long time I wanted to become an entrepreneur, but I neither had enough money nor did I have a really great business idea. Then I realized that you can actually find and buy yourself a great company, allowing you to fulfill your entrepreneurial dreams.

It is a fantastic model because it can co-exist next to private equity. We use the same LBO model. As long as private equity exists, search funds can exist as well. Search funds have an advantage as we can provide a value proposition that private equity cannot offer. Clearly there are investors behind me, but my purpose is to make a difference in my life, in my future colleges, and in my future customers. This is a value proposition that private equity cannot offer. As a matter of fact, 10 months from today I have not come across one owner who said he loved private equity. They do transact with private equity because they bring liquidity in the market and give exit opportunities. Yet, if they had a choice, they would rather leave their business in the hands of their sons, daughters, in-laws or to other entrepreneurs because they know the company would be in better hands.

I think going forward the search fund as a model will grow. We are not going to stay the only search fund in Benelux. We are going to see more and more funds all across Europe. But I do think that it is going to remain a niche. In my opinion, it will not become as mainstream as private equity. The reason is that in the US this model has existed for 30 years, and it is still a niche, so I don’t think that in Europe this will be different.

As we are all interested in Private Equity and finance in general, what are the main skills that one can acquire by working for a search fund?

The advantage you have by doing an internship at a search fund is that you actually get to see the entire model of private equity and get more responsibilities. At my firm, as an intern you have executive power, the interns are running the show. In a private equity firm, you at best see a small portion of the firm, you can look into a model, and do a quick task.

The way we designed our process is that our interns find companies and reach out to these companies. When the companies get back to us, our interns research the company, get us ready for conversations with the owner(s), prepare questions and when they have answers, do the follow-up, get involved in the due diligence, and get involved in the negotiations. Essentially, they get to see everything.

From time to time, interns also get to see information memorandums we get through brokers we are in touch with. In our firms, our interns are part of that process and so they get to see the entire workings of a private equity fund. This puts them in a fantastic position if they later want to go and apply for a private equity fund.

What are the main skills that you look for in candidates? What open positions do you have?

A lot of the work is individual and due to the new work-from-home setting we can scale fast. As a result, we don’t have a limit on how many people we can hire. 

More importantly, we need to see commitment. Because obviously when you are talking to a company owner, and the owner expresses interest, he can’t wait 2 or 3 days for a reply. We have to respond and investigate the firm immediately. Therefore, it requires commitment from our interns as we ask them to be with us for at least 2-3 days per week for a period of at least a few months. This would be the ideal case, because then you will get to see the whole picture of how a company moves along through all steps of the process.

In terms of candidates, one of the things I value is diversity. We like to have people from around the world, all genders, different backgrounds and we like this because it adds to our view on a business. Our team included for example a statistician and a physician. Every candidate goes through an interview process but in the end, our interns hire our new interns. We like team players, nice colleagues, who are hard workers and willing to learn.

If you were to go back to a few years ago when you were at university, would you do something differently? 

The fact that you are already exposing yourself to the professional world from a young age is really smart. In life, you got to be lucky as well. The fact that I am here today is also caused by a sequence of random decisions I made in the past. The best thing in life, not only career-wise, is that when you do things you love, you tend to do them better.

Keep on looking until you find something you love. I have been working in the search fund for almost 2 years now and not a single day has felt like “work”. This is the difference between having a job vs. doing something that you love. If you have found this thing then you can wake up and fall asleep with it, without getting tired – as a matter of fact it energizes you. This is the thing that gives you a competitive advantage over other people who do not love what they are doing.


Aymeric Pardo

Arthur Wildiers


Boris Mihaylov