Search Fund Earnouts: Fair Deal or Hidden Trap for Sellers?
Search Fund Earnouts: Fair Deal or Hidden Trap for Sellers? Quick Answer Search fund earnouts typically push 15% to 30% of purchase price into a 2 to 3 year measurement period, usually tied to EBITDA. They can be fair when the buyer offers a cushion, GAAP-plus accounting, an ordinary-course covenant, and a no-shop clause that […]
How Search Funds Finance Acquisitions (and What Sellers Should Know)
How Search Funds Finance Acquisitions (and What Sellers Should Know) Quick Answer Search funds are investment vehicles where entrepreneurs raise capital from investors to search for and acquire an existing business, typically a founder-owned company generating 500k to 5 million in EBITDA. The model operates in two phases: a search phase where the entrepreneur identifies […]
What Is a Search Fund Buyer in 2026? What Sellers Need to Know Before the First Meeting
A search fund buyer is an entrepreneur (or team of two) who has raised committed capital from investors specifically to acquire and operate a single business, typically in the $1M-$5M EBITDA range. Their mission is to become CEO of what they acquire, hold for 5-7 years, and generate a return for their investors on exit. […]
The Pros and Cons of Selling to a Search Fund (No Sugarcoating)
The Pros and Cons of Selling to a Search Fund (No Sugarcoating) Quick Answer Selling to a search fund offers advantages like seller financing flexibility, earnout potential, and a buyer committed to long-term growth, but disadvantages include longer sales processes, less liquidity upfront, and dependency on the search fund operator’s execution ability. Search funds typically […]