What is the difference between a traditional and self-funded search fund?

In a traditional search, investors fund a searcher's salary and expenses for ~2 years and get a right to invest in the acquisition. In a self-funded search, the searcher pays their own costs and raises capital only at the time of acquisition, keeping more equity.

How much money does a searcher make?

Traditional searchers earn ~20–30% equity in the acquired company, vested across finding, performance, and time. Self-funded searchers often keep 60–80% of the equity but carry personal risk during the search.

Resources · Search Funds

What is a search fund?

Q: What is a search fund?

A search fund is an investment vehicle in which an entrepreneur raises capital from investors to find, acquire, and then operate a single small-to-midsize business, typically for 5–10 years.

Q: How long does a search fund take?

The search phase typically lasts 18–24 months. Operating the acquired company usually runs 5–7 years before exit.

A search fund is a simple idea with a lot of moving parts. One person (or a small team) raises money from investors to find, buy, and then run one good small business. This guide explains how it works in plain English, from raising your first dollar to closing your first deal.

The 60-second version

You raise a small amount of money (called search capital) to pay yourself and cover expenses while you look for a business to buy. Once you find one, your investors get the right to fund the acquisition. You run the company for 5–10 years, grow it, and eventually sell it. Everyone shares in the upside.

The two models

1. Traditional search fund

Investors put in ~$400k–$550k up front. That pays your salary, travel, legal fees, and deal costs for about two years. In exchange, they get:

A step-up on their search capital (usually 1.5×) at acquisition.
The pro-rata right to fund the acquisition equity.
About 70–80% of the company's equity in total.

You earn ~20–30% equity, vested in three tranches: finding, time, and performance.

2. Self-funded search

You pay your own way during the search. When you find a deal, you raise equity and SBA debt just for that transaction. You usually keep 60–80% of the equity, but you carry the risk of a long unpaid search.

Rule of thumb: traditional = less personal risk, less upside. Self-funded = more personal risk, more upside.

The four phases

Fundraising (2–4 months)

Write a PPM, pitch 20–40 search-fund investors, close a raise of ~$400k–$550k across 12–20 units.

Sourcing (12–18 months)

Build a proprietary pipeline: broker outreach, direct owner mail, industry conferences. Screen 300+ businesses to find 3–5 you'd actually buy.

Diligence & close (3–6 months)

Sign an LOI, order QoE, run legal and environmental diligence, secure an SBA 7(a) or conventional loan, and wire funds.

Operate (5–10 years)

Take the CEO seat. Retain the team, install cadence and reporting, pay down debt, grow revenue and margin. Sell or hold.

Typical deal size

Enterprise value: $5M–$25M
EBITDA: $1M–$3M
SBA-friendly multiples: 3.0×–5.0× EBITDA
Capital stack: ~10–15% equity, 60–75% senior debt, 10–25% seller note

What good targets look like

Recurring or repeat revenue with real customer stickiness.
Owner-dependent enough to buy at a fair multiple, not so dependent it can't survive the transition.
Fragmented industry — room to grow organically or via tuck-ins.
Boring is beautiful. Distribution, services, and B2B software all work.

Common mistakes new searchers make

Sourcing from one channel only. Brokers + direct outreach + referrals is the durable mix.
Skipping a Quality of Earnings report to save $30k. Don't.
Under-modeling working capital. It kills more first-year operators than debt service.
Trying to change the team in month one. Watch, listen, then decide.

How AcquireOS fits

AcquireOS is the operating system searchers use to run this whole process end-to-end: pipeline, buy box, AI deal analyzer, diligence checklists, recast P&L, capital stack, and a First 100 Days plan. Everything on this page is a workflow inside the app.

Try AcquireOS free See a real deal dossier

Frequently asked questions

How long does a search fund take?

The search phase is usually 18–24 months. Operating the company after acquisition typically runs 5–7 years.

Do I need an MBA?

No. Most search-fund investors like MBA searchers because the training maps well to the job, but plenty of successful searchers don't have one.

How much do searchers earn?

Traditional searchers earn ~20–30% equity in the acquired business, vested over finding, performance, and time. Self-funded searchers keep 60–80% but pay their own way during the search.

Can I raise a search fund solo?

Yes. Solo searches are common. Partnered searches raise more capital and share the workload, but split the equity.