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Let’s start at the beginning of your journey. What motivated you to launch Zinc Capital in Portugal in 2019, becoming the first duo of searchers (just a few months after the first pioneer acquisition, Project to Be)? Which investors trusted you and supported you along this path?
Hello Sébastian — first of all, congratulations on the incredible work you’ve done with searchfundsnews.com. We’ve been subscribers for a long time and genuinely recommend it to anyone who wants to learn more about Search Funds (or simply stay up to date with what’s happening in the community).
As for what motivated us to launch Zinc Capital in Portugal in 2019, it’s deeply connected to our previous experience in private equity. We were actually working at competing PE firms a few years earlier, and during that time we came across many solid businesses facing succession issues. At the same time, we felt a growing desire — and curiosity — to take on a more operational role within a specific company. The car analogy is still the best way we’ve found to describe it: we were back-seat passengers who wanted to try the driver’s seat. In 2019, the ETA model felt like the most compelling way to make that transition.
In March or April 2019, we had a few initial conversations with João Diogo Stoffel (the first search fund entrepreneur in Portugal) and some of the most experienced European investors at the time. What was supposed to be a simple introductory call about the ETA model quickly turned into a discussion about us, about Portugal, and eventually into a soft commitment to a project that we hadn’t even formally launched yet.
At the time, we were both living in London — Tiago working at a boutique consulting firm and Leonardo finalizing the MBA program at London Business School — and together we made the decision to launch a traditional search fund in Portugal. Our approach was sector-agnostic, but we were clearly focused on healthy companies facing succession challenges.
Back then, raising a search fund required a proper in-person roadshow. We had a very intense couple of months traveling to meet investors across the US, Portugal, Spain, France, the UK, and Germany. We closed our cap table in August 2019 and officially started the search in September.
We were very pleased with the final composition of our cap table, which included former ETA entrepreneurs, institutional investors, and local investors — a combination that gave us both strong alignment and valuable diversity of perspectives from day one.
How did you identify the right company in less than one year, especially considering that the process took place during the COVID period? How was the deal structured?
Although our search period was relatively short, we don’t consider that metric particularly relevant — or even a measure of success. The typical 24-month search window exists for a reason. It allows searchers to compare multiple opportunities, get comfortable with the negotiation dynamics of a deal, build trust with sellers, and ultimately take the time needed to acquire a truly great business. Speed, by itself, is not the goal.
In our case, we met the owners of TECLENA in our second month of search (pre-COVID). The opportunity came through proprietary outreach, supported by a buy-side broker. We were immediately attracted to several characteristics of the business, particularly its strong historical financial performance and resilience.
At that time, however, the company chose not to move forward with us. Even so, we had the opportunity to present ourselves and our project directly to the two owners, which proved to be very valuable later on.
A few months into COVID, they re-engaged through our buy-side broker. We learned they had been in discussions with another buyer who, due to the uncertainty created by the pandemic, had postponed final negotiations and was requesting a six-month delay in closing. That reopened the door for us.
During this second interaction, we secured a four-month exclusivity agreement and ultimately finalized the acquisition in October 2020 — roughly one year after raising our search fund.
The deal was structured as a fairly straightforward LBO, on the higher end in terms of total leverage. We acquired 100% of the company, and the structure included a small seller’s note payable over two years. At signing, we had a relatively small equity gap, but it was fully covered by our existing investors.
It’s also important to highlight the context: we were acquiring a Portuguese distribution business shortly after the outbreak of COVID. Despite the uncertainty at the time, we felt tremendous support from our investors — even from those who did not participate in the acquisition. Their input and guidance were critical throughout the process and played an important role in getting the deal across the finish line.
In particular, the support from our investors who were former searchers made a real difference. Having walked in our shoes just a few years earlier, they understood the pressure, the doubts, and the complexity of closing a deal in such an environment. In our view, that type of investor — someone who has lived the process firsthand — is the most valuable partner you can have on your cap table.
What were the biggest challenges in the first months after the acquisition, and how did you overcome them? Could you also share the key strategies you implemented to grow the company successfully over the past five years?
We were extremely fortunate with the quality of the team at TECLENA and with how positively we were welcomed from day one. We were new to the sector, there was no real transition period with the former owners (they were already fully out of the business), and so we had to rely heavily on the existing team. They played a critical role in involving us in key decisions and guiding us through the most urgent operational priorities.
TECLENA was a distributor of industrial components focused on three main technologies: hydraulics, pneumatics, and electrical automation. In the first few months, after numerous conversations with clients, we realized there was an opportunity to position the company as a true cross-technology specialist in Portugal. Customers valued having a partner capable of covering multiple industrial technologies rather than dealing with fragmented suppliers.
Based on that insight, we designed a plan to grow both organically and inorganically, expanding our technological offering. Over the five years during which TECLENA was controlled by search fund investors, we completed five acquisitions. The four of the Portuguese businesses acquired were merged into a new entity, TECLENAJUNCOR, creating a stronger and more diversified national platform.
We also expanded internationally into Spain with the acquisition of RODAMIENTOS CONDE, a local distributor based in Galicia. That marked our first cross-border step and added an important growth vector to the group.
This rapid buy-and-build strategy, combined with strong organic growth, allowed us to grow revenues and EBITDA by more than 3x during the period. Of course, that level of acceleration brought significant challenges. Integrating teams, aligning cultures, managing working capital, and maintaining service quality while scaling were constant priorities.
Ultimately, the team at TECLENAJUNCOR and RODAMIENTOS CONDE was the decisive factor behind the success. Their commitment, adaptability, and willingness to embrace change made the integration process possible.
Executing a complex buy-and-build strategy with limited resources — and with a very disciplined approach to capital allocation and leverage — also required rigorous financial planning and analysis. We were fortunate to have a highly supportive board throughout the journey. They did not always agree with us or with every proposal we brought forward, but they were always willing to engage in meaningful discussions and healthy debates. That dynamic strengthened our decision-making process and ultimately contributed to a strong performance and a positive outcome for all stakeholders involved.
You successfully sold the company last September to Dexis. How did you determine it was the right time to sell, and what was your approach to identifying and selecting the right buyer?
To be more precise, Descours & Cabaud, through its industrial distribution arm DEXIS, acquired 100% of the shares held by our Search Fund investors. That transaction marked the end of our Search Fund project.
More importantly, we remained fully committed to the business and new phase of this project. As co-CEOs, we retained an equity stake in the group and continue to lead TECLENAJUNCOR and RODAMIENTOS CONDE in this next phase of growth.
In reality, we did not define a specific timing window to execute a trade sale, nor did we mandate a broker or advisor to sell the company. From day one, however, we made a conscious effort to study the leading players in our industry. That helped us anticipate trends, identify potential opportunities, and benchmark our KPIs and strategic initiatives against best-in-class operators.
DEXIS, as the leading European player in our sector and part of a prestigious French family-owned group, had always been on our radar. Over the years, we had several opportunities to interact with executives and directors from the group, particularly within their Portuguese and Spanish operations.
Through those interactions, we developed a strong appreciation for their culture, long-term vision, and operating model. We felt that their core values were closely aligned with the culture we were building at TECLENAJUNCOR. So when initial conversations around a potential partnership began, they evolved naturally. What started as exploratory discussions gradually became a strategic alignment.
The process itself was demanding but highly professional. Ultimately, we felt that joining forces with DEXIS represented the best possible outcome — not only for our investors, but also for our teams, clients, suppliers, and all other stakeholders. It allowed us to provide liquidity to our Search Fund investors while simultaneously securing a strong long-term industrial partner to support the next chapter of growth.
Portugal has been performing very well, with seven acquisitions in recent years and two successful exits, both delivering IRRs above 35% and MOICs above 4x. With a new wave of searchers entering the market over the past six months, what opportunities do you see today, and how do you envision the future of the Portuguese search fund ecosystem?
The first two exits of Portuguese search funds were indeed very strong, delivering returns that clearly place them in the top quartile globally. We are also aware of a few other Portuguese search funds that are likely to land in a similar range, so the overall outlook for the ecosystem is very encouraging.
There is definitely more competition today than when we started in 2019. However, we still see fundamentally the same opportunity that attracted us back then. Portugal (and all major European countries) continues to have a large base of healthy, niche, family-owned businesses where owners are approaching retirement age and need a credible succession solution.
Of course, some of these businesses will be acquired by competitors, and others will transact with traditional private equity players. But for owners who genuinely care about their legacy, about preserving the company’s culture, and about ensuring a smooth and responsible transition, search funds remain an extremely compelling option. The alignment of incentives, the long-term commitment of the entrepreneur, and the proximity to the business are difficult to replicate in other models.
Even with the rise of non-acquiring search funds — a trend we believe will also expand into Portugal and Spain over time — we think the opportunity set remains attractive for high-quality future searchers. The market is deeper than many people assume, and execution, not just availability of targets, will continue to be the key differentiator.
We are bullish not only in words but in actions. Through Gallium Growth, we are allocating a substantial portion of our own net worth to back the next generation of ETA entrepreneurs. That, in itself, reflects our conviction that the Portuguese search fund ecosystem is still in its early innings and has a very promising future ahead.
You have just launched Gallium Growth. Could you tell us more about this new investment vehicle and explain how your experience as searchers will help you support the next generation of entrepreneurs you plan to back?
We began investing in search funds in 2023 as a way to understand the model from the investor’s side and to support the local ecosystem, where there were very few experienced search fund investors. That initial phase confirmed two things for us: first, the opportunity is structurally attractive; and second, Europe lacks a very specific — yet critical — profile of investor: the former searcher turned investor.
That realization led us to launch Gallium Growth. Gallium Growth is a proprietary investment vehicle, wholly owned and funded by us. It is not a fund of funds, and we are not raising third-party capital. We invest our own capital, make our own decisions, and take full responsibility for every position we take. Our perspective is shaped exclusively by having gone through the search process ourselves.
What differentiates us — and what we believe is increasingly essential — is that we have lived the searcher journey. Today, the search fund space is becoming crowded with largely undiscriminated capital. Many investors position themselves as “search specialists,” yet most have never searched, never raised as a searcher, never negotiated debt as a first-time CEO, never sat across from a seller while carrying personal downside risk.
At the same time, many searchers perform little to no real due diligence on their investors. They assess brand, check ticket size, and move on — without truly understanding the incentives, constraints, or background of those sitting on their cap table.
We believe this is a structural weakness in the ecosystem.
Only someone who has lived the model can fully understand the psychological, financial, and operational pressure a searcher experiences — from fundraising uncertainty, to deal fatigue, to post-acquisition isolation. A former searcher understands not just the mechanics, but the human side of the journey. And importantly, someone who has personally benefited from the model is far more likely to protect its integrity and defend the searcher’s long-term success, rather than optimize for short-term capital deployment or institutional metrics.
There are dangerous counter-incentives entering the space such as pressure to deploy capital, imported control-oriented dynamics and governance structures and SF model “innovations” that are not inherently wrong — but may represent different incentives.
Our thesis is simple: the best-performing searchers should secure a meaningful portion of their cap table from former searchers. Not because it is fashionable, but because alignment matters. A former searcher understands when to push and when to protect, when to be patient and when to be bold. They understand the value of maintaining appropriate leverage, of preserving entrepreneurial ownership, and of respecting the model’s long-term logic.
Gallium Growth exists to bring that alignment back to the center of the ecosystem. We are not trying to scale assets under management. We are trying to back outstanding entrepreneurs while defending the integrity of a model that changed our lives — and that we believe must remain entrepreneur-first to continue working.
Based on your experience, what advice would you give to someone considering starting their own search fund today? What were the key lessons from your journey, and what qualities or criteria are you looking for in the searchers you plan to invest in?
Our main advice is still the same advice we received from our core investors back in 2019: before launching anything, immerse yourself in the ecosystem.
The first step in any search fund journey should be a long period of informal conversations — one-on-one meetings, group discussions, events, conferences, meet-ups, and many hours spent on platforms like searchfundnews.com. After 60 or 70 genuine interactions, you will start to understand what this community really is — how people think, how aligned incentives can be, and whether you truly want to be part of it.
This is not a purely financial model; it is a people-driven ecosystem. It’s ownership at its highest level. If you don’t feel comfortable with the transparency, the long-term commitment, and the personal exposure that comes with it, it’s better to realize that early.
