About Search Funds
A model where investors support entrepreneurs to
find, acquire, and grow a profitable SME in need of succession.
What are Search Funds?
A Search Fund is an investment model within the Entrepreneurship Through Acquisition (ETA) space, where aspiring entrepreneurs, known as Searchers, raise capital from experienced investors to identify, acquire, and operate an existing small or medium-sized enterprise (SME) with strong fundamentals and growth potential.
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Investors play a central role in this model. They provide capital during the search phase, participate in the acquisition, and often mentor the new CEO as the company transitions to its next stage of leadership. This hands-on involvement not only enhances value creation but also fosters disciplined governance and operational excellence.
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The objective is straightforward: to grow and professionalise the business, generate stable cash flows, and ultimately deliver attractive, risk-adjusted returns through a successful exit.
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As an alternative to traditional private equity, Search Funds offer investors exposure to the real economy, lower leverage, and meaningful engagement with the next generation of entrepreneurial leaders, all while addressing the global challenge of SME succession.
Why invest in
Search Funds?
Small and medium-sized enterprises (SMEs) represent over 90% of all firms worldwide and employ the majority of the global workforce. Yet, according to BBVA, nearly 67% of these businesses lack formal succession plans.
With 41% of SME owners now aged 59 or older (World Bank, 2023), the need for generational transition has become one of the largest untapped investment opportunities in the real economy.
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Search Funds provide a disciplined, proven framework for addressing this challenge. By pairing well-performing SMEs in need of succession with highly qualified entrepreneurial leaders, investors gain access to stable, cash-generative businesses with strong growth potential and limited leverage exposure.
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For Investors, the model combines the downside protection of established businesses with the upside of entrepreneurial execution. It transforms a global succession gap into a source of long-term, risk-adjusted returns, creating both financial value and lasting impact.
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As a result, Search Funds are rapidly becoming a recognised niche within Private Equity and Venture Capital portfolios, offering unique exposure to real-economy growth, strong governance, and responsible capital deployment.
Over three decades, Search Funds have been outperforming traditional classes of investments with an aggregate IRR of 28%.
The growing popularity of Search Funds can be attributed to their perceived lower risk compared to traditional startups or early-stage ventures.
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At the heart of every successful Search Fund is the operational capability of its entrepreneur, supported by experienced investors who bring strategic insight, sector expertise, and global networks. These leaders combine analytical rigour, practical execution, and collaborative governance to unlock value in established SMEs, driving margin expansion, digital transformation, and sustainable growth.
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Unlike traditional private equity, Search Fund entrepreneurs are personally invested alongside their backers. With meaningful equity stakes and their own capital at risk, their incentives are fully aligned with long-term value creation. This ownership mindset fosters exceptional accountability, disciplined execution, and sustainable performance.
Typical holding periods range from four to seven years, allowing sufficient time to implement strategic initiatives, strengthen operations, and position companies for attractive exits.
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The result is a distinctive investment model that blends the resilience of proven businesses with the entrepreneurial energy of first-time CEOs, delivering compelling, risk-adjusted returns and lasting impact for investors.