Search fund
A model in which one or two entrepreneurs seek to acquire and operate a business. In a traditional search fund, investors finance the search before a target is selected; self-funded searchers cover their own search costs.
Search fund in practice
Hypothetical traditional search: investors fund a search budget intended to last roughly two years and receive rights to participate in acquisition financing under the agreed terms. Finding a suitable business, obtaining financing, and completing a purchase are not guaranteed.
Reference
Stanford Graduate School of Business: A Primer on Search Funds.
Terms Related to Search fund
LBO · Founder-led business · Management incentive plan (MIP) · Compounder · Independent sponsor · All of the glossary