How Search Funds Find Deals

A searcher has one job for the first year or two: find a single good company whose owner will sell to them. Most of the ones who succeed do it by talking to owners directly, long before a broker is involved. This guide covers how that works in practice, with the numbers the search fund studies actually report.

If you are earlier in the process and want the whole sequence (buy box, sourcing, valuation, diligence, financing and closing), start with our guide to how to buy a business off-market. This page goes deep on one stage of it, the sourcing a searcher does.

What a search fund is, and the two main models

A search fund is one or two people who set out to find, buy and then run a private company, usually for five to ten years. The model was built for operators who have the ability to lead a business but not the capital to buy one outright.

Traditional (or "core") search fundsraise a small pool of capital from a group of investors to pay for the search itself, including the searcher's salary. Investors hold most of the acquired company, and the searcher typically ends up with as much as 25% of the equity.

Self-funded searchers pay for the search themselves out of savings or part-time income, then finance the purchase with some mix of SBA debt, a seller note and equity. A common example stack is roughly 80% SBA loan, 10% seller note and 10% equity. The searcher keeps far more of the company, often a majority or all of it, and carries more personal risk: anyone owning 20% or more of the business has to personally guarantee the SBA loan. SBA 7(a) loans top out at $5 million, which keeps most self-funded deals in the smaller end of the market. SBA rules on equity injection and seller notes have changed in recent years, so confirm the current terms with your lender before you build a deal around them. We cover how sellers carry part of the price in our guide to seller financing.

The sourcing problem is the same in both models. Someone has to find an owner who is ready, or nearly ready, to sell a business that fits.

How long a search takes, and how many succeed

Stanford GSB has tracked more than 850 core search funds in the US and Canada since 1996. Its 2026 study puts the aggregate acquisition rate at 58%, with acquiring a company typically taking around 20 months. For funds launched between 2021 and 2024, only about half had acquired a company. The median purchase price for companies bought in 2024 and 2025 was $16 million.

Outside the US and Canada the picture is similar. IESE's 2024 international study reports a median search of 21 months from start to close, and on average searchers who eventually acquired signed their first LOI around month 7. Those who ended without a deal signed their first LOI around month 9 on average. Nearly 40% of searchers who had not signed an LOI in their first 12 months never acquired a business.

The practical reading: the first year decides most searches. A searcher who spends six months building relationships with brokers before starting any owner outreach has used up a large part of the window in which outcomes are set.

The funnel: how many companies a searcher looks at

IESE asked searchers about their whole funnel. Before acquiring, the average searcher explored over three thousand businesses, had personal conversations with 159 owners and signed about four LOIs. Several LOIs fail for every one that closes, mostly over problems found in diligence or disagreements on valuation.

Those numbers explain most of how a good search is run. You need a lot of owner conversations to get to one deal, and you need them early. A channel that produces three conversations a month cannot get you to 159 inside two years.

The channels searchers use

In the IESE survey, about two thirds of searchers named proprietary approaches as their primary source of deal flow, meaning direct contact with owners plus personal and investor networks. Around a third leaned mainly on third-party sources such as brokers, investment banks and service providers. Here is how each channel tends to behave for a searcher.

Brokers and intermediaries

Brokers bring prepared deals: an owner who has decided to sell, financials in order and a defined process. That is real value, and plenty of searchers close brokered deals. The cost is competition. A listed business goes to every buyer the broker knows, including buyers with bigger cheques and committed capital. A first-time searcher with investors still to be convinced is rarely the broker's first call, and on smaller deals the broker's fee gives them little reason to spend time on a buyer who may not close. Our piece on how business brokers get listings explains why their best inventory moves before most buyers see it.

Direct outreach by email, phone and letter

This is the channel most successful searchers lean on. You build a list of every company that fits your criteria, find the owner and contact them yourself. Email gives you volume, while a phone call gives you a faster read on whether an owner is serious, so many searchers use both in one sequence (some add letters for older owners in traditional trades).

Interns and callers

Funded searchers often hire student interns or part-time callers to build lists and make first-touch calls. It scales the hours, though quality depends on how well you train them and how closely you review the calls. An owner who gets a scripted call from a 21-year-old does not feel like they have met the buyer.

Networks: investors, advisors and other owners

Your investors, local CPAs, attorneys, bankers and owners you have already met all hear about businesses that may come up for sale. Introductions from them convert well because trust is already there. The weakness is that they arrive on their schedule, so a network works as a supplement to a system of your own.

For a full ranking of these channels against each other, see every channel for finding businesses to buy. For what each one costs per deal, see our breakdown of deal flow costs.

Why proprietary sourcing matters more to a searcher

A PE firm with a fund can win a competitive auction by paying more. A searcher usually cannot. Your investors expect you to buy a good business at a sensible price, and in a broker auction the sensible price tends to be the losing bid.

Direct conversations change what you compete on. An owner who has never been approached by a buyer is weighing you against the option of doing nothing at all. What you offer that a larger buyer often does not is personal: you will run the company yourself, keep the name and look after the people who built it. Many owners of 25-year-old businesses care about those things as much as the last half-turn of the multiple. You can only make that case in a conversation you started.

There is a second benefit. Proprietary conversations give you context before price comes up. You learn why the owner might sell, what they would do afterwards and what worries them. That is exactly the information you need to structure a deal they will accept, whether that is a longer transition, an earnout or a seller note.

How a searcher's outreach should read

Your outreach is the one place a searcher has a clear edge over institutional buyers, so do not hide it. Write in the first person, as yourself, about your own plan. Owners answer a person who says plainly who they are and what they intend to do. They ignore emails that sound like a fund trying to sound like a person.

• Lead with who you are. One line on your background and the fact that you plan to run the business yourself.
• Say why their company. Their trade, their region, how long they have been operating. Specific beats flattering.
• Ask for a conversation. A short call, with no talk of LOIs or valuations in the first email.
• Keep it short. Most good first emails are under 100 words and read cleanly on a phone.
• Leave out the jargon. "Platform," "EBITDA" and "value creation" read as institutional. Use the words the owner uses about their own business.

An illustrative first email, to show the register (written for this guide, not taken from a live campaign):

Follow-ups matter as much as the first email. A short sequence over several weeks, each step adding something new (why you chose the trade, what you would keep the same), reaches owners who were busy the first time. And log every "not now" with a date, because an owner who says they are two years out is one of the best leads you will get.

What volume and conversion to expect

Be realistic about the shape of the work. Most owners will not reply. Of those who do, many are not ready, and of those who are interested, only a few have a business that holds up under diligence. That is the same funnel IESE describes: thousands explored, about 160 real conversations, a handful of LOIs and one close.

What changes the outcome is how fast you fill the top of that funnel with the right owners. A searcher sending a few dozen hand-written emails a week will get some good conversations, but it will take most of the search period to reach the volume of conversations the data says you need. A properly built outreach program, with verified owner emails, separate sending infrastructure and copy written in the searcher's own voice, gets you there in months.

Two of our clients show what that looks like. These figures come from the clients' own reply trackers and count interested owners, people who said they would talk about selling, rather than all replies.

Put that next to the IESE funnel. In under three months Rockland Heritage had 125 interested owners, which is most of the way to the 159 owner conversations the average searcher has across an entire search. Not every one of those owners will sell, and many will not be ready for a year or more. But a searcher with that pipeline is choosing which conversations to pursue, which is a far better position than waiting on the next listing.

The honest tradeoff is that outreach is slow to set up and is real work to run. Sending domains need weeks of warm-up before volume. Owner data for small private companies is patchy and has to be verified. Replies have to be answered quickly and by someone who sounds like the searcher. Our page on deal sourcing for search funds covers how we handle that work for searchers, and the next stages of the deal are laid out in the full process of buying a business.

A simple sourcing plan for a new search

• Month 0 to 1: Write down the buy box (industry, size, geography, owner situation). Start the outreach infrastructure warming at the same time, since that takes weeks.
• Month 1 to 2: Build and verify the owner list. Introduce yourself to the brokers who cover your niche so you see what they list.
• Month 2 onward: Run direct outreach continuously. Track conversations per month as your main number, aiming to put the first LOI on the table well inside the first year.
• Always: Keep two or three live conversations moving in parallel, because most LOIs fail in diligence and a single deal under exclusivity leaves you with nothing if it does.

Many of the best searcher deals come from owners close to retirement who have no successor in the family. If that is your target, our guide to buying a business from a retiring owner covers how those conversations differ.

If you would like to see what direct outreach would look like for your search, you can book a call with us and we will walk through your buy box.

Worth reading next: our ranking of the biggest acquisitions of all time; our private equity firms list by segment and sector; and the leading deal origination platforms for off-market deal flow.