Definition
A search fund is a structure where one or two entrepreneurs raise a small amount of capital — typically $400K to $700K — from a group of investors to spend 18–24 months searching for a single business to buy. Once they find one, those same investors (plus often new ones) provide the equity capital to acquire it. The entrepreneur becomes the CEO of the acquired business. The original investors get equity returns when the business is eventually sold. Search funds have grown rapidly over the last decade, especially in the $1M–$10M earnings range, where they're often the most natural buyer for an owner-operator looking to retire.
What it means for you
Search fund buyers have become a real and competitive buyer category for owner-operated businesses in the $1M–$5M earnings range — often the most natural buyer for a retiring owner.
The buyer’s lens
The searcher isn't buying an investment — they're buying their next ten years.