The investor’s field guide · S
Search fund
A structure in which investors support an entrepreneur’s search for a business to acquire and usually operate.
Explained by the editorial team
A search fund supports someone seeking a private company to buy and run. In a traditional structure, investors first fund the search and may later provide acquisition capital. A self-funded search uses different financing for the search phase. Models vary across the UK, US and other markets.
How it works
The searcher identifies businesses, approaches owners and examines potential acquisitions. If a suitable transaction proceeds, they typically take an operating leadership role. Search expenses and acquisition funding are distinct stages, and an extended search may end without a purchase.
What to examine
Understand investor commitments, decision rights, the searcher’s equity and how incentives change over time. Assess industry focus, operating experience, debt assumptions and the plan for replacing the seller. Investors should also examine what happens if the searcher leaves or the acquisition needs more money. The structure does not make buying or running a company straightforward; it organises a demanding process around a particular operator.
General information, not investment, legal or tax advice. Examples are illustrative. Read the disclaimer.