Kingsway Financial Services (KFS) Planet MicroCap Showcase: VEGAS 2025 summary

Search fund model and market opportunity

• Search funds offer strong historical returns, with median annual IRRs in the mid-30% range since 1984, making them an attractive asset class for investors.

• The model bridges the gap between retiring business owners lacking succession plans and motivated entrepreneurs seeking to acquire and grow businesses.

• A demographic shift, the "silver tsunami," will see over $4.8 trillion in small business wealth transition as baby boomer owners retire, creating a large supply of acquisition targets.

• Traditional private equity often overlooks these businesses, leaving favorable acquisition opportunities for search funds.

Unique value proposition and structure

• Provides public investors with liquid, diversified, and transparent access to the search fund asset class, which is typically illiquid and fragmented.

• Maintains a disciplined acquisition approach, focusing on high-quality, asset-light businesses with recurring revenue and strong margins.

• Operates with a decentralized management model, empowering operator-CEOs to drive growth while providing strategic oversight and support.

• Benefits from a tax-advantaged structure, with $622 million in net operating loss carryforwards to shelter future earnings.

Growth strategy and performance

• Employs a self-funding growth flywheel: acquire quality businesses, invest to professionalize and scale, then reinvest increased cash flows into further acquisitions.

• Targets two to three acquisitions per year, with an underwriting hurdle of over 30% IRR per deal.

• Portfolio spans B2B services, healthcare, software, and skilled trades, reducing exposure to any single sector.

• Recent case study: SPI acquisition led by a talented operator, resulting in significant operational improvements and growth within 18 months.