A search fund is an investment vehicle where an entrepreneur (or team of two) raises capital from investors to search for, acquire, and operate a single business, typically an SMB in the $1M-$5M EBITDA range. The Stanford model has produced 681+ funds since 1984, and 2024-2026 data shows median IRRs of 32.6% for successful funds. For sellers, what it means when a search fund is your buyer: single-CEO operator succession, seller-friendly earnouts, and typically slower diligence than PE, but real capital certainty via committed investor pool.
Last updated: 2026-04-13
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A search fund is a pool of capital raised by an experienced operator (the searcher) who dedicates 2-4 years to identifying, acquiring, and running a profitable small business. The searcher typically raises $500,000 to $2 million from investors, uses these funds to cover acquisition and operating costs, then personally runs the company post-acquisition while investors receive equity returns. Search funds have deployed over $5 billion across 1,000+ acquisitions since the 1980s, with median IRRs around 25-30%.
A search fund operates in distinct phases:
The home services industry is particularly attractive to search fund operators because acquired companies typically generate strong cash flow (15-25% EBITDA margins), face fragmented competition, and benefit from hands-on operational improvements. A searcher acquiring a $3-5 million revenue electrical contracting or HVAC company can implement standardized processes, hire management, and grow through bolt-on acquisitions, all while debt service is covered by existing cash flow. If you’re evaluating search-fund buyers, our breakdown of What It’s Like to Sell Your Business to a Search Fund explains how their deal structures differ. If you’re evaluating search-fund buyers, our breakdown of Search Fund Earnouts — Fair Deal or Hidden Trap explains how their deal structures differ.
Search fund investors don’t receive salaries or interim distributions during the search and operating phases. Instead, they own equity in the acquired company. Returns come when the searcher exits, typically through:
A successful exit in 5-7 years can return 2-4x invested capital, depending on company growth and market conditions.
If you own a home services business, understanding search funds matters because they’re an active buyer segment. Search funds typically acquire companies with $1-10 million in revenue and strong owner-operator economics. Unlike PE platforms requiring rapid scale, searchers often maintain stability while improving operations. At CT Acquisitions, we connect home services owners with search fund operators and 40+ other capital partners, ensuring you understand each buyer type’s timeline and strategy.
Search funds focus on single-business acquisition and organic growth; PE firms buy platforms with multiple add-ons. Searchers are typically operators who run companies hands-on; PE investors install professional management. Search funds avoid debt-heavy structures; PE uses significant leverage. For sellers, search funds mean less post-deal pressure to grow rapidly but potentially lower purchase multiples than strategic buyers or large PE platforms.
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Every business is different. A quick conversation can give you a real answer based on your specific numbers. Related: our walkthrough on self funded search fund vs traditional search fund.
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About the Author
Christoph Totter is the founder of CT Acquisitions, a buy-side partner headquartered in Sheridan, Wyoming. We work directly with 100+ buyers, search funders, family offices, lower middle-market PE, and strategic consolidators, including direct mandates with the largest consolidators that other intermediaries cannot access. The buyers pay us when a deal closes, not the seller. No retainer, no exclusivity, no contract until close. Connect on LinkedIn · Get in touch
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