Extracts from the Archives: Asurion
The Original CFM
The most successful search fund ever, undeniably, is Asurion.
As of 2021, it had returned a 5,278x MOIC, or a 62.9% IRR, to its original investors.
Today, I have the opportunity to share with you all, paying subscribers that is, the original CFM, Confidential Financing Memorandum, from the original acquisition of Road Rescue in 1995.
Please, if you haven’t already, consider becoming a paid subscriber for the price of just a coffee a month.
Asurion’s lineage, for those unaware, began in 1995 when the Lone Pine Corporation, Kevin Taweel and Jim Ellis’s search fund, acquired a small roadside assistance business — Road Rescue.
Road Rescue, Inc., founded in 1987, provided roadside assistance services to local dealerships in the Houston area, and quickly expanded to soon include cellular phone carriers as well. At the time of the search acquisition, they had grown to having ~20 carriers under contract across 70+ cities and were “the leading provider of roadside assistance to cellular carriers in the country.”
A great example of a simple subscription-based service business: they charged carriers a fixed monthly fee per month per subscriber and then “dispatch(ed) calls for assistance to (their) fleet or to contracted service providers.”
Asurion subsequently moved into handset insurance in 1999 with the acquisition of The Merrimac Group, and the rest is history in the evolution of “the leading provider of value-added subscriber services to the wireless industry.” Over 25+ years, Asurion never returned over any five- or ten-year period an unlevered IRR less than 25%! (1995-2021)
Yet, the focus for today’s post is not a Case Study in Asurion, but instead the opportunity to read the original investment memo from the GOAT of search funds.
It’s not just future searchers that will benefit from reading the below we all can glean something…
Enjoy!