Search Fund

In the prior post, alignment of key stakeholders, ie. Operator, investors and business seller, is described as the secret sauce of success in Search Fund. The whole process of ETA is not just to find the right company, but also a process to gather adequate resources to finally put the deal together.

Responsibility across phases

During the Search Phase (18-24 months):

• Develop a clear, compelling investment thesis describing the ideal acquisition target
• Raise $300K-$700K in search capital from investors
• Maintain investor relations and provide regular updates on progress
• Identify and contact potential acquisition targets through multiple sourcing channels
• Conduct preliminary due diligence to qualify opportunities
• Build relationships and networks in target industries

During the Acquisition Phase (4-8 months):

• Lead detailed deal sourcing and negotiations with sellers
• Conduct comprehensive financial, legal, and operational due diligence
• Work with lenders and advisors to validate the business case
• Model financial projections and growth scenarios
• Negotiate purchase price and deal structure
• Raise acquisition capital from existing search investors and new equity partners
• Coordinate with lenders to secure debt financing
• Manage legal documentation and closing process

During the Build Phase (5-10 years):

• Assume role of CEO and full operational responsibility
• Implement operational improvements and efficiency initiatives
• Drive revenue growth and market expansion
• Manage team, including succession planning for key roles
• Maintain board relationships and investor communications
• Pursue bolt-on acquisitions if appropriate
• Build EBITDA and enterprise value

During the Exit Phase (2-6 months):

• Lead exit strategy and identify potential buyers
• Negotiate with strategic buyers or financial sponsors
• Prepare the business for transition
• Ensure continuity for customers and employees
• Realize personal equity returns and consider next chapter

Key documents of phases

Sources:
Exploring and Understanding the Various Legal Documents in a Search Fund Project
Christmas, K., Grumberg, K., Herzog, J., Jani, R., Leigh, R., Salpietro, F., & Wasserstein, A. (n.d.). Retrieved November 12, 2025, from https://som.yale.edu/sites/default/files/2025-04/Exploring%20and%20Understanding%20the%20Various%20Legal%20Documents%20in%20a%20Search%20Fund%20Project.pdf