Search Fund Resources

The Complete Guide to Entrepreneurship Through Acquisition

Search funds represent one of the most systematic and proven approaches to entrepreneurship through acquisition (ETA), offering aspiring business owners a structured path to acquiring and operating profitable small to mid-sized businesses. Whether you’re considering a traditional search fund backed by investors or pursuing a self-funded approach, this comprehensive resource guide provides the tools, strategies, and expert insights you need to navigate every stage of the search fund journey.

As someone who has navigated the search fund ecosystem firsthand, I’ve experienced both the excitement and challenges of the ETA journey. This curated resource guide combines my personal experience with the latest industry research, including the Stanford GSB 2024 Search Fund Study and IESE International Search Fund Study 2024, alongside insights from successful searchers and leading business schools that have pioneered the search fund model for over four decades.

Having worked through the real-world complexities of deal sourcing, due diligence, and transition planning, I’ve curated the most valuable resources while identifying critical gaps, helping you make informed decisions and avoid the pitfalls I’ve seen (and sometimes experienced) firsthand.

What you’ll find in this resource guide:

Overview
Search Phase: Finding and Evaluating Acquisition Targets
Closing a Deal
Legal
- - Law Firms
  - Insurance for Searchers
Transition Phase: Taking Over as CEO
Publications (Books & Research)
- - Recommended Reading List
  - Search Fund Industry Research Reports
Additional Learning Resources
Events

Overview of search funds

Entrepreneurship through acquisition (ETA) encompasses many versions of individuals buying and growing existing companies rather than starting from scratch. The search fund model is an increasingly popular form of ETA in which an entrepreneur seeks to acquire and operate a small to mid-sized business, typically with investor backing.

This section explores the appeal of ETA as a pathway to business ownership, the motivations of searchers and sellers in private SMB acquisitions, and the different types of search funds.

What are search funds?

A search fund is an investment vehicle where an individual or small team raises capital to identify, acquire, and then operate a small business. The searcher typically becomes the CEO and works closely with investors who provide both the search capital and acquisition funding.

This approach offers compelling advantages over starting from scratch. While most new businesses fail trying to find product-market fit and establish sustainable cash flows, search entrepreneurs can bypass these existential startup challenges entirely.

By acquiring an established business, you skip the uncertain early phase and step directly into operating a profitable company with an existing customer base, proven revenue streams, and a known track record of performance. The search fund model can be a great fit for individuals who are very entrepreneurial, but who are maybe not “zero to one” entrepreneurs or who want to apply their skills to already established companies for growth.

Traditional search funds vs. self-funded search funds

Traditional search funds have become popular among graduating MBA students at institutions that support them. Stanford pioneered the model in the mid 1980s and other prestigious business school programs followed suit.

In a traditional search fund, a pool of private investors raise initial capital to fund the search process, including living and business expenses for the searcher while they seek a company to acquire. Once the searcher identifies a target and complete due diligence, the search fund deploys acquisition capital to help purchase the business, which the searcher then operates. The terms for the search may vary but often they receive 8.3% equity in the company at closing, with additional equity awarded through incentives over 5 years and based on performance.

Self-funded search funds emerged more recently, based on a similar concept. This model involves individuals or small teams looking for businesses to acquire without financial backing during their search phase. Instead, they self-fund the search process, absorbing the costs of travel, due diligence expenses, legal fees, etc. In exchange, self-funded searchers have more control over their selection criteria and keep most of the equity in the acquired company.

Most traditional search funds target companies with $1M–$10M in EBITDA (most commonly between $2M–$5M). Self-funded search deals tend to be smaller due to the limits on the SBA loans commonly used to finance these deals. Self-funded searchers usually target companies with $500k–$2M in EBITDA.

Search funds vs. independent sponsors

Independent sponsors use a slightly different model for small business acquisitions.

Whether traditional or self-funded, searchers assume an operational role at the acquired company. They usually become the CEO and try to grow the business by running and improving the company’s day-to-day operations.

But independent sponsors approach business acquisitions more as investors that entrepreneurs. They broker deals between business sellers and equity investors. Sponsors acquire equity and board seats through their deals, but typically install qualified management to run the company rather than operating the business themselves.

Independent sponsors target larger businesses than search funds—usually companies with EBITDA between $10M-$75M.

Comparing entrepreneurship through acquisition models

Model	Self-Funded Search Fund	Traditional Search Fund	Independent Sponsor
Typical background	Experienced entrepreneur	MBA or business school graduate	Private equity, investment banking, or other financial professional
Typical EBITDA of target business	$500k–$2M	$2M–$5M	$10M–$75M
Search phase support	No	Yes	No
Personal financial risk	Costs during search process, personal guarantee on SBA debt	None	Costs during search process
Typical equity retained at closing	Up to 80%	8.3%	10%–15% (may be more or less)
Searcher’s post-acquisition role	Majority owner and operator (usually CEO)	Minority equity owner, operator, sometimes board member	Minority equity owner, advisor, sometimes board member
Typical sources of debt capital	SBA loan with personal guarantee	SBA loan, seller financing, commercial bank loan	Commercial bank loan, SBIC funds, private credit

For more info, see our page on search fund statistics, on search fund performance and returns, the investor base, and industry trends.

Search Phase: Finding and Evaluating Acquisition Targets

The search phase is the foundation of a search entrepreneur’s journey, where you’ll identify, evaluate, and pursue potential acquisition targets. This process requires a strategic approach to sourcing deals, leveraging industry networks, and using research tools to uncover promising businesses.

This section includes resources and best practices to help searchers navigate this critical first stage efficiently.

Search Strategies

Deal flow is a primary challenge for active searchers.

Your personal network is the best and most direct source of opportunities. But there are plenty of ways to uncover opportunities and generate deal flow beyond your immediate social and business circles.

DIY Direct Outreach: Reach out to business owners directly via cold calls, emails, and direct mail expressing your interest in buying. This approach requires a consistently high volume of outreach and methodical tracking. Direct mail may seem old fashioned, but usually comes across as less intrusive than unsolicited calls or emails.
Business Marketplaces: Tap into existing marketplaces of small businesses for sale. This is a great way to build your pipeline quickly, but deal quality on these marketplaces varies. Plan to uncover some duds during due diligence. See below for a list of business marketplaces to help get you started.
Business Brokers: Access deals from business brokers and M&A intermediaries. These deals tend to be easier to access and usually come with data rooms and CIMs. However, brokered deals usually get “auctioned” to multiple buyers. The competition drives up valuations and reduces your negotiating leverage.
In-Person Connections: Meet business owners in person at industry conferences and other events. (You’ll find a list of ETA conferences below.) You can also join trade associations in your target niche to help meet business owners in your industry. This approach may be resource intensive in terms of time and money, but tends to yield warm leads and bolsters your credibility.

Best Practices for Search Funds During the Search Phase

Define Your Ideal Target Profile. Set clear criteria for the industry, company size, geography, and business model you want to target. Prioritize recurring revenue, high margins, low customer concentration, and stable cash flow. Continually refine your priorities based on what you learn during outreach and diligence.
Build a Robust Deal Pipeline. Use a multi-channel sourcing strategy: direct outreach (cold calling/email), broker relationships, proprietary networks, and online deal marketplaces. Track your leads systematically using a spreadsheet or CRM software (see below) to avoid missed follow-ups.
Show Owners Your Care. Many attractive targets are owned by founders considering retirement. These sellers often care about their legacy. Craft messages that convey your genuine interest in stewardship, not just acquisition. Position yourself as a long-term operator, not just another faceless buyer.
Screen Opportunities. Avoid getting bogged down in unpromising deals. Use a checklist or scoring rubric to quickly eliminate poor fits. Focus your time on businesses that meet your core criteria with sellers who are motivated and realistic.
Develop a Repeatable Diligence Process. Create or download templates for initial financial review, industry assessment, and seller interviews. The goal is not to shortcut diligence, but to make the early steps efficient so you can get a quick read on opportunities without missing anything.
Nurture Investor Relationships Throughout the Search. Keep potential investors in the loop with regular updates—even before you have a live deal. Use their feedback to sharpen your process, and lean on their networks for leads and warm introductions.

Business Marketplaces

If you don’t have personal connections to any prospective business sellers, you can explore various online marketplaces that list businesses for sale. Below are some of the better known platforms:

Business Valuation Tools

CRM Software

Closing a Deal

The closing phase is the final—and often most complex—stage of an ETA deal, where all the pieces come together to complete the acquisition. This stage involves finalizing due diligence, securing financing through SBA loans, finding niche search fund investors, negotiating legal agreements, and ensuring a smooth transition of ownership.

Below are resources to help searchers and sponsors navigate the key challenges in getting a deal over the finish line.

Conducting Due Diligence

Thorough due diligence increases the likelihood of a successful acquisition. By carefully evaluating the target company’s financials, operations, market position, and potential risks, searchers can make better-informed decisions and avoid costly surprises post-acquisition. Due diligence also can uncover hidden opportunities for growth and operational improvements.

This section provides essential resources and tools to streamline the due diligence process and support data-driven decision-making.

Due Diligence Checklist

Thorough due diligence involves analyzing many factors, including some that are easy to overlook. Using a checklist of categories to investigate will help you review each target business methodically and completely.

Searchers conducting due diligence should evaluate each of these areas of a target business:

1. Financial Due Diligence

Analyze historical performance and revenue trends.
Verify EBITDA, cash flow, and margins.
Assess quality of earnings (see below).
Review working capital requirements, debt obligations, and off-balance-sheet liabilities.

2. Operational Due Diligence

Evaluate the efficiency of business processes and systems.
Review supply chains, vendor relationships, and logistics.
Identify potential integration issues or operational risks.

3. Commercial Due Diligence

Understand the market landscape, including competitors and customer trends.
Assess the company’s value proposition and market positioning.
Gauge scalability, total addressable market (TAM), and growth potential.

4. Legal and Compliance Due Diligence

Review corporate governance, contracts, and legal structure.
Identify any pending litigation or regulatory issues.
Ensure intellectual property and licensing rights are secure.

5. Management and Human Capital Due Diligence

Assess the strength and depth of the leadership team.
Evaluate key-person risks to the business.
Review management and employee compensation structures and incentives.
Understand organizational culture and potential transition challenges.

6. Technology Due Diligence

Evaluate proprietary systems or third-party platforms.
Review cybersecurity protocols and data management practices.
Determine technical debt and future investment needs.

Due Diligence Resources

Here are a few of the top rated due diligence service providers.

Due Diligence Services

Centurica – Our top recommendation for due diligence (QoE light)
DueDilio
Intrinsic
Rapid Diligence
SMB Diligence

Quality of Earnings Providers

SBA Loans and Lenders

Most searchers use a Small Business Administration (SBA) loan to finance their acquisition. In particular, SBA 7(a) loans enable many self-funded searchers to complete an SMB acquisition.

However, the SBA loan process is notoriously complex. Searchers should be prepared to satisfy strict eligibility criteria, extensive documentation requirements, and thorough due diligence.

Below you’ll find a primer on SBA loans and key resources to help searchers successfully navigate the process of securing funding through the SBA.

Why and How Search Funds Use SBA Loans

Many self-funded searchers find SBA loans an attractive option for debt financing. These loans tend to offer entrepreneurs more favorable terms than conventional commercial loans, such as lower down payments, longer repayment periods, and competitive interest rates.

These features make SBA loans particularly useful for searchers acquiring SMBs without significant upfront capital or collateral.

SBA loan benefits include:

Lower equity requirement. Buyers can usually finance up to 90% of the purchase price.
Longer repayment terms. SBA 7(a) loans offer terms of up to 10 years for business acquisitions.
Lower interest rates. SBA loans offer competitive rates compared to conventional business loans.
Easier qualification standards. Despite a rigorous qualification process, SBA loans may be more accessible than private financing options.

SBA Lenders and Loan Brokers List

Loan Calculators

Loan Calculator and Amortization Schedule tool (The SMB Center)
SBA Loan Calculator (Lendio)

Investors

Here is a dedicated list with the top search fund investors to help searchers close the equity gap and raise capital for deals.

Legal

Searchers need legal protections to safeguard both their personal and business interests throughout the acquisition process. From structuring purchase agreements to mitigating liabilities, having the right legal protections in place can prevent costly mistakes.

This section provides links to key legal tools, including contract templates, insurance options, and other resources to help searchers navigate the legal complexities of buying and operating a business.

Law Firms

Several law firms specialize in advising search funds. Specialized law firms provide legal counsel throughout the entire search fund lifecycle, including navigating the fundraising, acquisition, and exit.

Insurance for Searchers

Insurance Brokers for Search Funds

Common types of insurance for search funds to consider include:

Representation and Warranties Insurance (RWI) provides protection against financial losses from unintentional or unknown breaches of a seller’s representation and warranties about the business.
General Partners Liability (GPL) Insurance shields general partners in search funds from lawsuits or claims arising from errors or omissions in their activities.
- Most GPL policies include D&O (Directors and Officers) Liability Insurance protecting corporate directors and officers against personal damages from wrongful act allegations and lawsuits.
Life Insurance (Key Person Insurance) provides a death benefit if a key person dies, allowing the business to cover expenses, repay loans, replace lost revenue, or recruit a replacement.

Transition Phase: Taking Over as CEO

Taking over as CEO after acquiring a small business is an exciting but delicate phase. The transition period can make or break long-term success. Your job is to allow operations to continue seamlessly, earn trust, and prepare for sustainable growth while you learn the nuances of the business.

As the new owner, you don’t need to prove yourself to be the smartest person in the room. You need to become the most trusted. The transition is usually about evolution, not revolution. Focus on preserving what’s working before pushing for change.

The transition phase is a good time to practice listening more than you speak.

Transition Checklist

1. Coordinate With the Seller

Discuss a formal transition plan, including any changes in roles, responsibilities, and timelines.
Clarify the seller’s continued involvement post-sale, if any.

2. Meet the Team

Hold one-on-one conversations with key employees.
Communicate your role, intentions, and commitment to continuity.

3. Understand the Operations

Shadow team members and document key processes.
Identify any immediate risks, dependencies, or gaps.

4. Build Trust with Customers & Vendors

Personally reach out to top customers, partners, and suppliers.
Reassure continuity in service and relationships.

5. Financial & Legal Housekeeping

Review financial controls, cash flow, and reporting.
Transfer licenses and update signatories.
Notify banks and insurers of the ownership change.

6. Establish a Management Rhythm

Set regular team meetings and reporting cadences.
Begin capturing KPIs, even if informally at first.

7. Plan for Quick Wins

Look for low-risk improvements to build momentum and morale.
Acknowledge early successes, even small ones, and show appreciation for the team’s support.

Common Transition Pitfalls to Avoid

Changing too much too fast. Early aggressive changes can destabilize a well-functioning team. Making too many small changes all at once can also feel overwhelming or frustrating. During the early transition period, focus on continuity and pick your battles when making changes.
Ignoring culture. Nothing undermines trust faster than a new owner violating a company’s norms and culture. Of course, a dysfunctional organizational culture can quietly sabotage even the best strategy. Be respectful of the business’s established culture even as you aim to gradually shape it.
Over-relying on the seller. When you first take over the business, the previous owner’s input can be incredibly helpful. But the seller’s influence should wane as you learn the business and step fully into leadership. A formal transition plan helps set expectations and avoid future conflict.
Under-communicating. Providing your new team with regular updates inspires confidence and helps to build a constructive relationship. Silence, by contrast, creates anxiety and uncertainty. Your team will appreciate clear communication about what you’re working on and your expectations.
Neglecting your own support system. Searchers are a self-reliant lot, but nobody should go it alone. Isolation leads to burnout, poor decision-making, and unhappiness in general. Connect with a community of small business owners like yourself and look for mentorship opportunities.

Resources to Lean On During the Transition

The Seller/Former Owner. Often, nobody knows the business better than the previous owner. They can be a great resource to help you learn the ropes, especially if they were actively involved in the day to day before selling. The seller can be a guide in the short term during the transition, but be careful not to rely on them as a crutch.
Industry Peers. Find peers in your industry or using a similar business model. Even in the most specialized niche, you can find other business owners who are operating in similar ways or reaching similar audiences. Identify and establish a relationship with a few of them.
Acquisition Communities. Join an entrepreneurship through acquisition community, if you haven’t already. They’re great places to meet like-minded entrepreneurs and ask questions of other small business acquirers who have been where you are now. You can find online ETA communities at The Snowball Club, Searchfunder, or Acquisition Lab, to name a few.
Professional Advisors. The transition period is a great time to lean on professionals to help cover your blind spots. Find a good CPA, attorney, and HR consultant of whom you can ask questions and seek advice. It’s often well worth paying for these services to avoid costly mistakes in these crucial areas.
Mentors or Coaches. Look for people who have been where you are now, and establish a formal mentor or coaching relationship. Ideally you can find a mentor or coach who has operated a similar business before, but experienced searchers from other industries can still help you a great deal.

Operating Tools

The folks over at The SMB Center have built some useful operating tools that search entrepreneurs can use to run their newly acquired business more efficiently and manage their time effectively.

Project Management Dashboard. Organize projects, track tasks, and monitor progress through a single Notion dashboard.
Eisenhower Matrix. A Notion template designed to help entrepreneurs prioritize, streamline decision making, and determine which tasks to delegate or eliminate.
L10 Meeting Hub. A structured meeting format that facilitates focused discussions, tracking progress, and actionable outcomes.

Publications (Books & Research)

Whether you’re new to search funds or an industry veteran, there’s always more to learn. The books and research reports below represent a body of knowledge every searcher should find useful.

Recommended Reading List

Mergers & Acquisitions Bible by Nathan S. Goodwin (2024)
Glossary of Search Fund Terms by Newton M. Campos (2022)
Search Funds & Entrepreneurial Acquisitions by Jan Simon (2021)
Acquiring Entrepreneurship by Aneesh Reddy (2019)
Buy Then Build by Walker Deibel (2018)
The Messy Marketplace by Brent Beshore (2018)
HBR Guide to Buying a Small Business by Richard S. Ruback and Royce Yudkoff (2017)
The Myth of The Idea and the Upsidedown Startup by Newton M. Campos (2015)
Traction: Get a Grip on Your Business by Gino Wickman (2007)

Search Fund Industry Research Reports

Additional Learning Resources

Here are additional resources you can use for further your knowledge about search funds, ETA, and small business ownership.

Content Channels

For as niche as it is, there’s a surprising amount of content dedicated to the topic of search funds and ETA. Below are a few prominent examples of blogs, of search fund podcasts, and videos on the subject. These are great free resources you can use to learn more or to find answers to specific questions you have along the way.

Blogs

Podcasts to Follow

Newsletters

Reddit

Oddly enough there is not a great Reddit search fund presence. The r/MBA subreddit frequently has content on ETA, but it’s not great.

Videos

2020 Search Fund Studies: Review of Findings (IESE Business School)
Coley Andrews: What it Takes to be a Search Fund Entrepreneur (Stanford Graduate School of Business)
Conversation with Irv Grousbeck (Stanford Graduate School of Business)
The Four Paths of Acquisition Entrepreneurship (Walker Deibel)
Insights From a Search Fund Entrepreneur (Polsky Center)
Legal Aspects of a Search Fund (Polsky Center)
Search Fund Panel – New Horizons (Stanford)
Search Funds: The Investor’s Perspective (Stanford Graduate School of Business)

Online Courses

MBA Programs

Interested in pursuing the traditional search fund path? Consider one of these MBA programs that support business school graduates who want to pursue the entrepreneurship through acquisition model.

Events

Attending a good search fund conference or industry event is almost always worth the effort. That’s especially true if you’re looking to establish connections with others in the industry or seeking opportunities and deal flow.

There are a handful of established ETA and search fund conferences that consistently deliver value to attendees, and new ones are likely to emerge. Consider starting with these tried and true events:

ETA and Search Fund Conferences

Updated: July 5, 2025

Jim Cirigliano

Jim is a financial writer and small business founder empowering small businesses with world-class editorial content. He is an investor and entrepreneur who understands the content creation needs of specialized industries, niche applications, and technical or complex subject areas.

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