WHY DO SEARCH FUNDS WORK?

Passionate entrepreneurs leverage decades of investor experience to generate superior returns.

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Discerning, natural sellers

Company owners are usually older individuals seeking retirement, without a defined succession plan, and seeking the right steward of their legacy.

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Motivated management

Close alignment of incentives between entrepreneurs and investors; searchers receive common equity vesting over time and tied to the company’s performance.

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Checks and balances

Even though searchers run the company, investors control the Board and must sign off on important decisions.

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Simple operations

Target companies have straightforward business models, low capital intensity, and healthy cash flows.

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Favorable terms

Searchers customize transaction terms to meet sellers’ needs, enabling them to pay less than other buyers.

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Quality teams

The vast majority of searchers graduate from top MBAs and choose to become searchers over other profitable career options.

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Inefficient marketplace

Small transactions outside PE firms’ target size allow for low valuations and favorable terms.

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Experienced investors

Many SF investors executed successful searches themselves and have invested in the asset class for decades.

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Management vetting

Funding the search capital allows investors to get to know the searchers well and gauge their fit as future CEOs before acquiring a company with them.

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Stable industries

Searchers primarily target B2B companies in non-cyclical industries to produce a larger margin of safety.

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Lack of correlation

Target companies are small,
niche-focused, and operate in
non-cyclical industries, so they remain insulated from broader political and macroeconomic risks.

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Collaborative community

Aspiring searchers solicit advice from current searchers, investors, and operators, most of whom are happy to guide and mentor them.