What is a Search Fund?
Unlike traditional private equity funds, which own multiple companies and operate in partnership with company leadership, the manager of a search fund (also referred to as a “search fund entrepreneur” or “searcher”) acquires just one company and typically installs themself in a high-ranking role, such as CEO or president. Search funds fall under the category of entrepreneurship through acquisition (ETA) and are often used by entrepreneurs as a way to gain control of a company and shepherd its growth as an alternative to founding their own startup.
Why a Search Fund?
High Potential Returns
Search funds have historically generated above-market returns. According to studies, median IRRs for search fund investments can exceed 30%, outperforming traditional private equity and public markets. Access to Undervalued, High-Growth Businesses—Search fund entrepreneurs target small, profitable businesses ($5M—$50M in revenue) that are often overlooked by larger private equity firms. These businesses may have strong fundamentals but lack professionalized operations, making them ripe for value creation.
Other reasons:
Strong Alignment of Incentives
Diversification in Private Markets
Professionalized Approach to Small Business Investing
Hands-On Involvement & Influence
Favorable Exit Opportunities
