The search fund model has grown considerably over the past decade. With that growth has come a proliferation of investors — family offices, institutional funds, and individual angels — all competing to back the next generation of searchers. But not all capital is equal, and the best searchers know it.
What separates a great search fund investor from a merely adequate one? In our experience, it comes down to three things: lived experience, genuine availability, and the discipline to stay in their lane.
Lived experience matters because the search process is genuinely hard to understand from the outside. The emotional arc of a search — the early optimism, the grinding middle, the anxiety of a near-miss, the pressure of a closing — is not something you can fully appreciate from a term sheet. Investors who have been through it, or who have worked closely enough with searchers to internalise it, bring a different quality of support.
Availability is underrated. Many investors are excellent in the first meeting and largely absent thereafter. The searchers we back tell us consistently that what they value most is a partner who picks up the phone — not just when things are going well, but when they are not.
And discipline means knowing when not to intervene. The best investors we have observed are those who can distinguish between a situation that requires their input and one that requires the searcher to find their own way. Over-involvement is as damaging as under-involvement. The goal is to be a resource, not a crutch.
Five years ago, a European searcher raising a fund would have found a thin market of investors with limited familiarity with the model. Today, the picture is meaningfully different. There are more investors, more completed acquisitions, and — critically — more data on what works.
The Iberian Peninsula, in particular, has seen strong growth. Portugal and Spain have produced a number of successful searches, and the ecosystem of advisors, lawyers, and lenders who understand the model has deepened considerably. This matters: a searcher in Lisbon today has access to a support infrastructure that simply did not exist a decade ago.
At the same time, the market has become more competitive. Attractive targets — businesses with stable cash flows, defensible niches, and willing sellers — are increasingly well-known to multiple searchers. The days of finding a great business that no one else has looked at are not over, but they require more creativity and more patience.
For searchers entering the market in 2026, we would offer three observations. First, sector focus matters more than it used to. Generalist searches still succeed, but a searcher with genuine expertise in a sector — and a network to match — has a real edge in sourcing. Second, the quality of the investor syndicate is increasingly a differentiator. Sellers are more sophisticated; they ask about your backers. Third, the operating phase is where value is created. The best searchers we know were thinking about how they would run the business before they had signed an LOI.
One of the most common mistakes we see in early-stage searches is conflating business quality with search fund suitability. A business can be genuinely excellent — profitable, well-run, with a loyal customer base — and still be a poor search fund target. Understanding the difference is one of the most important skills a searcher can develop.
Our framework for evaluating targets starts with four questions. First: is the business genuinely transferable? Some businesses are deeply dependent on the founder's relationships, reputation, or technical knowledge. These can still be acquired, but the transition risk is higher and the timeline to full ownership is longer. Second: is the cash flow durable? We look for businesses with recurring or repeat revenue, low customer concentration, and limited exposure to cyclical demand.
Third: is there a credible path to growth? Search fund returns are driven by multiple expansion and earnings growth. A business that is well-run but structurally limited in its growth potential may generate a decent return but is unlikely to produce the outcomes that make the model compelling. Fourth: is the seller genuinely motivated? A seller who is ambivalent about selling — or who has unrealistic price expectations — will consume enormous time and energy. The best deals we have seen involve sellers who are ready to move on and who care about what happens to the business after they leave.
Most of the literature on search funds focuses on the search phase — how to raise capital, how to source deals, how to structure an acquisition. Far less attention is paid to what happens after close. Yet the transition from searcher to CEO is where many of the most important decisions are made, and where many of the most common mistakes occur.
The first instinct of many new CEOs is to move quickly — to implement changes, assert authority, and demonstrate to investors that they are in control. This instinct is understandable but often counterproductive. The first 100 days should be primarily about listening: to employees, to customers, to suppliers, and to the outgoing owner. The goal is to understand the business as it actually is, not as it appeared in the information memorandum.
The relationship with the outgoing owner deserves particular attention. In most search fund acquisitions, the seller stays on for a transition period. This relationship can be enormously valuable — or enormously difficult. The new CEO who treats the seller as a resource rather than an obstacle, and who is genuinely curious about what the seller knows, will almost always have a smoother transition.
Finally, the first 100 days are a critical window for building trust with the team. Employees are watching carefully. They want to know whether the new owner understands the business, respects what has been built, and has a credible vision for where it is going. The new CEO who can answer those questions — through actions as much as words — will find the organisation far more willing to follow.
