About

What Is Search Fund?

A search fund is an investment vehicle conceived in 1984 through which investors financially support an entrepreneur’s efforts to locate, acquire, manage, and grow a privately held company. The term originated at Harvard Business School and was popularized at Stanford GSB thereafter.

The model offers relatively inexperienced entrepreneurs with capital resources a path to managing a company in which they have a meaningful ownership position.

By 2023, there are 681 qualifying search funds in North America. The aggregate pre-tax exit internal rate of return is 35.1%, and the aggregate pre-tax return on invested capital is 4.5x.

Stage One

Fundraise

Raise seed capital for searching. Investors come from both local and international and those joining this round enjoy favorable terms in the acquisition.

Stage Two

Search

Source potential targets through referral and proprietary search. Conduct due diligence with third parties and negotiate deal terms with sellers.

Stage Three

Grow

Searcher will serve in the management role at the company to grow business and strengthen profitability.

Stage Four

Exit

Exit through IPO or trade sale to realize value for investors and company.

What We Are Searching

Enduring business with a history of profit and owner looking to transit from the business.

Record of Success

Business with low cyclicality and has proven enduring through 5+ years of operation.

History of Profit

Business making stable profit annually in audited financial reports.

Motivation to Sell

Owner ready to start the exit process and eager to transit to the next phase of life.