For an owner who has spent decades building a company, succession is as much a question of who will run the business as who will buy it. A search fund brings those decisions together: investors back an entrepreneur who intends to become the company’s next chief executive.
This report examines search fund returns, acquisition prices, searcher backgrounds, and the model’s growth in North America and internationally. CapitalPad Research compares the published studies and market data, distinguishing results for exited companies, businesses still being operated, and searches that never led to an acquisition.
Aggregate pre-tax IRR
U.S./Canada core search funds · Stanford 2026 · through December 2025.1
Core search funds tracked
U.S./Canada · cumulative launches since 1984 · through December 2025.1
Median acquisition price
U.S./Canada · 2024–2025 acquisitions · USD enterprise value.1
Historical investment returns cited here come from third-party research and do not represent CapitalPad’s investment performance. Past performance does not guarantee future results. Private equity investments are illiquid and may result in partial or total loss of capital.
The owner-operator’s role in a search fund investment
In a traditional search fund, investors first finance an entrepreneur’s search, then decide whether to fund the acquisition. The entrepreneur becomes the company’s chief executive, supported by investors who can contribute capital, judgment, and operating experience. The business brings an existing base of customers, employees, and earnings.
| Element of the model | Potential investment benefit |
|---|---|
| An established business | Customer relationships, operating records, and existing earnings provide evidence for evaluating the purchase and planning improvements. |
| A dedicated CEO | The searcher makes running the acquired company a central professional commitment, with equity participation linking personal upside to business value. |
| Experienced investor support | A capable board can help a first-time CEO recruit, allocate capital, assess expansion plans, and respond to unfamiliar operating problems. |
| Room to professionalize | Better management, reporting, sales processes, or technology can help a company grow beyond the systems built around its previous owner. |
| A planned ownership transition | A seller can evaluate the person who intends to lead the company, with a transition plan for employees, customers, and key relationships. |
Stanford’s 2026 analysis found that recurring revenue and partnered searches were associated with stronger returns. Services businesses also showed higher returns and public-market equivalents.1 The findings make business quality and the operating team useful areas for diligence, although they do not isolate either one’s contribution to performance.
Search fund IRR and investment multiples
Stanford’s 2026 study reported a 33.9% aggregate pre-tax IRR and a 4.75x ROI for U.S. and Canadian core search funds through December 31, 2025. The results reflect original investors who supplied both search and acquisition capital. They include unsuccessful searches, operating companies with unrealized values, and positive and negative exits.1
IRR measures annualized performance using the timing of cash flows. ROI measures the reported value relative to invested capital. Stanford calculates both from pooled investor cash flows, so the headline figures describe the overall sample rather than an average individual fund.
| Population | Aggregate IRR | Aggregate ROI |
|---|---|---|
| Overall return sample | 33.9% | 4.75x |
| Acquired and exited companies | 39.3% | 5.98x |
| Exited companies plus unsuccessful searches | 35.3% | 5.61x |
| Excluding funds with ROI of 10x or more | 27% | 2.8x |
| Excluding the top 10% of funds by ROI | 20% | 2.1x |
Source: Stanford 2026, pages 7–10 and Appendix A.1 The overall calculations include unsuccessful searches, operating companies, and positive and negative exits. Returns pool investor cash flows rather than averaging individual fund IRRs. Operating values include unrealized estimates; follow-on financing is excluded under the study’s methodology.
How search funds compared with public markets
Search funds outperformed the S&P 500 in Stanford’s cash-flow-matched comparison through December 2025. The overall public-market equivalent (PME) was 2.88; for exited companies it was 3.59. A PME of 1.0 represents parity with the index.1
Public-market equivalent of search fund cash flows
U.S. and Canadian core funds through December 2025. A PME of 1.0 matches the S&P 500.
Source: Stanford (2026), pp. 11–12.1
PME accounts for when search fund investors contributed and received capital. It provides a public-market comparison, while the underlying investments retain different liquidity, concentration, and operating risks.
How search fund investment outcomes vary
The strongest investments contribute substantially to the headline result. Stanford still reported a 27% aggregate IRR after removing funds with ROI of at least 10x, but the corresponding investment multiple fell to 2.8x.1 Both figures matter: the broader record remains positive in that sensitivity analysis, and exposure to exceptional companies changes portfolio results considerably.
| Reported ROI band | Companies | Share of sample |
|---|---|---|
| Total or partial loss | 89 | 26.4% |
| 1–2x | 68 | 20.2% |
| 2–5x | 93 | 27.6% |
| 5–10x | 59 | 17.5% |
| 10x or more | 28 | 8.3% |
Source: Stanford 2026, Exhibit 7, page 25.1 Operating and exited companies with more than one year of operations and updated financial data; searches that never acquired a company are excluded. Shares are calculated by CapitalPad from the reported counts.
Of these acquired companies, 26.4% reported a total or partial loss and 25.8% reported an ROI of at least 5x. Operating-company values include unrealized estimates. This distribution describes company outcomes, not the realized proceeds or expected returns of an investor joining at acquisition.
Growth in U.S. and Canadian search funds
Stanford’s tracked U.S. and Canadian core search fund universe grew from 681 in its 2024 edition to 862 in its 2026 edition. The corresponding data cutoffs are December 2023 and December 2025. The newer study identified 181 qualifying launches in 2024–2025.1, 2
Cumulative U.S. and Canadian search funds
Core funds tracked since 1984, including concluded searches.
New launches peaked in 2023 and remained at historically high levels in 2024 and 2025. Acquisitions peaked in 2021, declined through 2024, and increased modestly in 2025.1 The number of people beginning a search and the number completing an acquisition have followed different paths.
More participants can mean more entrepreneurs seeking succession opportunities, more investors familiar with the model, and a deeper network of experienced CEOs. That network has practical value when a new owner needs advice on hiring, sales, finance, or a difficult customer transition.
Search fund education and operating support
The share of new U.S. and Canadian searchers who had taken an ETA course rose from 37% in 2020–2021 to 48% in 2022–2023 and 61% in 2024–2025.1 Stanford’s Search Fund CEO Conference also grew from roughly 230 attendees in 2017 to nearly 500 in 2025, with operating improvement and board support among the subjects discussed.5
Searchers with prior ETA coursework
Share of new U.S. and Canadian core searchers who took an entrepreneurship-through-acquisition course.
Source: Stanford (2026), Exhibit 1.1
Search fund acquisition sizes and EBITDA multiples
For U.S. and Canadian core search fund acquisitions in 2024–2025, Stanford’s 2026 study reported a median purchase enterprise value of USD $16 million and median EBITDA of USD $2.5 million. The median purchase multiple was 6.2x EBITDA, compared with 7.0x in 2022–2023.1
| Measure | 2024–2025 acquisitions | All acquisitions in the study |
|---|---|---|
| Purchase price | $16.0M | $13.5M |
| Revenue at purchase | $8.1M | $7.6M |
| EBITDA at purchase | $2.5M | $2.0M |
| EBITDA margin | 25.0% | 23% |
| Purchase price / EBITDA | 6.2x | 6.3x |
| Employees at purchase | 30 | 40 |
| Search duration | 21 months | 20 months |
Source: Stanford 2026, Exhibit 4, page 23.1 Each entry is a separate median; sample sizes vary by data availability.
Services remained the most common acquisition sector in the 2026 study, followed by software. Education, including credentialing and vocational training, reached its highest acquisition count; tech-enabled services and healthcare also remained prominent.1
At a median $2.5 million of EBITDA, the acquired companies sit at the smaller end of the lower middle market. The lower middle market EBITDA multiples guide provides transaction-size benchmarks for comparison.
Acquisition rates among concluded search funds
Stanford reports that 58% of concluded searches acquired a company across the full history. Among funds launched in 2021–2024 that had already concluded, the rate was 48%.1 These percentages exclude searches still underway; the recent figure is not the final outcome for every fund launched in those years.
The same study found higher acquisition rates among partnered searchers and those with more post-graduation experience.1 For an investor, that supports examining how a searcher evaluates companies, works with advisers, and builds a credible path to closing. A decision to walk away after diligence can preserve capital that would otherwise be committed to an unsuitable business.
Who becomes a search fund entrepreneur?
Search funds attract entrepreneurs from consulting, private equity, finance, and operating backgrounds. In Stanford’s 2024–2025 launch cohort, management consulting was the most common prior profession at 19%, followed by private equity at 18% and investment banking or finance at 15%.1
General management accounted for another 10%, operations for 8%, military experience for 7%, and entrepreneurship for 5%.1 Those backgrounds can contribute different strengths: evaluating a business, managing teams, selling to customers, or improving day-to-day execution. The relevant test is how the entrepreneur’s experience fits the company they intend to lead.
| Characteristic | Reported figure |
|---|---|
| Median age at launch | 32 years |
| Age 35 or younger | 83%26% under 30 plus 57% aged 30–35. |
| MBA education | 80% |
| Female searchers | 14% |
| Identifying as Asian, Black, Hispanic/Latino, or Other | 47% |
| Partnered searches | 34% of funds |
Source: Stanford 2026, Exhibits 1–3.1 Age 35 or younger is calculated from the two reported age bands.
The female share rose from 11% in 2020–2021 to 17% in 2022–2023, then eased to 14% in 2024–2025.1
How much search capital do traditional search funds raise?
Traditional search funds raise an initial pool to finance the search itself. In the latest U.S. and Canadian cohort, the median was $550,000 per principal and $600,000 per fund.1 The difference matters because some funds have two searchers. This money is separate from the equity and debt needed to buy the eventual company.
| Measure | Median |
|---|---|
| Initial capital per principal | $550,000 |
| Initial capital per fund | $600,000 |
| Investors per fund | 13 |
| Time spent fundraising | 3 months |
Source: Stanford 2026, Exhibit 3, page 22.1 Separate medians. Search-phase figures only, not acquisition capital or investor minimums.
The investors can contribute more than that initial budget. Advice on target selection, introductions to lenders, and a willingness to evaluate the eventual purchase all affect the searcher’s ability to move from finding a company to owning and leading it.
International search fund growth and acquisition rates
There were 503 known core search funds outside the United States and Canada by December 2025, according to international data reported in Stanford’s 2026 study through its partnership with IESE. Of concluded international searches, 72%, or 220 funds, had acquired a company.1
The international record has expanded considerably from the 83 first-time funds in IESE’s 2018 edition and the 320 in its 2024 edition.3, 6 This gives entrepreneurs and investors a growing body of experience across different business cultures, ownership structures, and financing markets.
Cumulative search funds outside the U.S. and Canada
Core funds at each study cutoff; counts can be revised between editions.
Spain, Mexico, the United Kingdom, and Brazil led IESE’s 2024 edition by cumulative first-time funds, with 67, 50, 35, and 34 respectively.4 Those are historical country counts through 2023, rather than an updated ranking for 2025.
The more recent Stanford report records first searches during 2024–2025 in Malaysia, Norway, Saudi Arabia, Singapore, Taiwan, Thailand, Turkey, and Uruguay. It also records first acquisitions in South Africa, Austria, and India.1
International search fund returns
IESE’s 2024 study reported an 18.1% aggregate pre-tax IRR and a 2.0x ROI for international search funds through December 2023; the median post-acquisition investment multiple was 1.4x.3 The portfolio was young: 62% of acquisitions had occurred since 2020, and the study reported 15 positive exits and six company failures. Its younger holdings and fewer completed exits limit a direct comparison with the U.S. and Canadian sample.
These returns run through December 2023, two years earlier than the international fund counts above.
Traditional, self-funded, and acquisition-stage search investing
ETA includes several ways to finance an entrepreneur’s acquisition of a business. Traditional search funds raise capital before finding a target. Self-funded searchers cover the search themselves and assemble acquisition financing once they identify a company. Both can lead to an entrepreneur becoming the company’s owner-operator.2
| Approach | What the investor evaluates | When a specific company is known |
|---|---|---|
| Traditional search-phase investment | The entrepreneur, search plan, budget, investor group, and rights to participate in a later acquisition. | After the initial search investment, when a suitable target is identified. |
| Self-funded search acquisition | A company selected by a searcher who financed the search personally, together with the operator and proposed financing. | Before the outside investor commits acquisition capital. |
| Acquisition-stage co-investment | The identified company, operator, purchase terms, investment structure, and post-close plan. | Before the acquisition investment. CapitalPad reviews search fund deals at the post-LOI stage. |
Sources: Stanford’s 2024 discussion of alternative models and CapitalPad’s search fund investor overview.2, 7 These are descriptions of structures, not rankings by risk or return. An acquisition-stage investment may still fail to close.
Stanford’s 2024 study described self-funded searches as the most numerous model, while noting insufficient data to report comparable outcomes.2 The core search fund return series therefore does not measure every form of ETA. Financing, ownership, investor rights, and the size of the acquired business can differ substantially.
Independent sponsor transactions offer another route into lower middle market private equity. Sponsors raise equity for individual acquisitions and work with existing or recruited management; their role does not necessarily include becoming the company’s chief executive.
Long duration enterprises and extended business ownership
Stanford’s 2026 study separately profiles 67 long duration enterprises, which raise committed capital before acquisitions and plan for extended ownership. The study’s LDE observations include partial data through April 2026. It does not yet report returns for that group.1 LDEs are not part of the core search fund return series.
How accredited investors can invest in search funds
Accredited investors can invest in search funds through CapitalPad at the acquisition stage, when a target business has been identified. Another option is to back a traditional searcher earlier, providing capital to find and evaluate potential acquisitions.
CapitalPad invests equity in acquisitions led by traditional and self-funded searchers, evaluating each opportunity after the company is under a letter of intent. Investors participate deal by deal; CapitalPad does not finance the initial search.7
Investors can assess the company’s financial history, the searcher’s background, investment terms, and operating plan before choosing whether to participate. Individual minimums start at $25,000, subject to eligibility, availability, and the offering’s terms.7
Stanford’s results reflect original investors who backed both the search and acquisition phases. An investor joining only at acquisition has different economics, so those aggregate returns are not a benchmark for CapitalPad opportunities.
Search fund statistics: common questions
What returns have search funds generated?
Stanford’s 2026 study reported a 33.9% aggregate pre-tax IRR and a 4.75x ROI for U.S. and Canadian core search funds through December 2025. These pooled results include unsuccessful searches, operating companies, and exits; they are not the return of a typical fund or a forecast.1
Have search funds outperformed the S&P 500?
Yes, in Stanford’s historical cash-flow comparison. The 2026 study reported an overall public-market equivalent of 2.88 and an exited-company PME of 3.59, where 1.0 represents parity with the S&P 500. The comparison does not adjust for all differences in risk or liquidity.1
How many search funds are there?
Stanford’s 2026 study tracked 862 core search funds launched in the U.S. and Canada since 1984. It also reported 503 known core funds outside those countries through December 2025. These are cumulative counts across multiple stages, not counts of currently active funds or all ETA transactions.1
What percentage of search funds acquire a company?
Stanford reported a 58% acquisition rate among concluded U.S. and Canadian searches overall. For funds launched in 2021–2024 that had concluded, the rate was 48%. Searches still underway are excluded, so the recent figure is provisional as an indicator of those cohorts’ eventual outcomes.1
How big are search fund acquisitions?
For U.S. and Canadian acquisitions completed in 2024–2025, Stanford reported a median purchase price of $16 million, median EBITDA of $2.5 million, and a median purchase multiple of 6.2x EBITDA. These are separate medians rather than the financial profile of one company.1
How much money does a search fund raise?
In Stanford’s 2024–2025 launch cohort, median initial search capital was $550,000 per principal and $600,000 per fund. Funds had a median of 13 investors. Those amounts finance the search; acquisition financing is raised separately.1
Are self-funded search returns included in the Stanford figures?
No. The core series covers first-time search entrepreneurs backed by multiple investors during the search phase. Self-funded searchers pay their own search costs and use a different financing route. The core-fund aggregate should not be presented as a measured self-funded search return.1, 2
Can accredited investors invest at the acquisition stage?
Yes. Accredited investors can invest in search funds through CapitalPad after the target is under a letter of intent. Individual minimums start at $25,000, subject to eligibility, availability, and the offering’s terms.7
Research scope and methodology
CapitalPad Research analyzes the investment case for search funds by bringing together academic performance studies, acquisition benchmarks, entrepreneur profiles, and evidence of market development. CapitalPad produces the comparative analysis, operating framework, calculated outcome shares, tables, and charts. Stanford and IESE supply the underlying market observations and return calculations.
| Publisher | CapitalPad Research. CapitalPad gives accredited investors access to selected search fund acquisitions through deal-by-deal co-investments.7 |
|---|---|
| Research type | Comparative analysis of published academic studies and institutional reporting, with original explanatory frameworks and disclosed calculations. |
| Principal sources | Stanford GSB’s 2026 and 2024 Search Fund Studies; IESE’s 2024 international study and historical reporting; Stanford’s CEO conference reporting; CapitalPad’s participation information. |
| Data cutoffs | December 2025 for the main U.S./Canada data and the newer international counts. December 2023 for IESE’s detailed international returns. The separate LDE discussion includes partial observations through April 2026. |
| Market universe | Traditional or core search funds: first-time search entrepreneurs supported by multiple search-phase investors. U.S./Canada and international populations are identified separately. Self-funded search and other ETA models are discussed as distinct structures. |
| Core measures | Aggregate IRR and ROI, PME, investment outcomes, cumulative fund counts, acquisition rates, company medians, search capital, and entrepreneur characteristics. |
| CapitalPad contribution | Connecting the evidence to the owner-operator investment case; comparing investment entry points; organizing source definitions; calculating company-outcome percentages; producing reference tables and charts. |
| Principal limits | Self-reported data, estimated values for operating businesses, differing cohort maturity, unequal sample sizes, and return concentration. Historical aggregate performance is not a typical deal outcome. |
How the evidence is sourced
- Stanford’s U.S. and Canadian research
- The 2026 study identifies funds through investors and public searches, gathers questionnaires and interviews, and seeks additional information for unusual outcomes where possible. It reports updated outcomes for 97% of known search funds. Appendix A describes an independent audit of calculation methods and checks against investor data where available. Those procedures support the study’s usefulness; they do not make every valuation independently audited.1
- International research
- IESE surveys traditional funds outside the United States and Canada. Its 2024 return calculation includes 130 funds: 37 unsuccessful searches and 93 acquisitions with at least one year of operations. The newer international fund and acquisition counts come from Stanford’s 2026 publication, which reports its work with IESE. This article retains the older return cutoff rather than pairing newer counts with an implied 2025 return.1, 3
- Historical growth and community
- Earlier Stanford and IESE editions establish reported cumulative counts at their respective cutoffs. Stanford’s conference reporting supplies attendance figures. Fund counts, acquisition counts, course participation, and conference attendance remain separate measures.2, 5, 6
- CapitalPad’s participation model
- CapitalPad’s public materials support the description of post-LOI search fund investing, individual deal selection, SPVs, and stated minimums. Its commercial role is distinct from Stanford’s and IESE’s collection of performance data.7
How to interpret the return statistics
Stanford’s IRR and ROI use aggregated cash flows from original search and acquisition investors, including equity and investor debt. They are pre-tax and exclude follow-on financing under the stated methodology. The headline includes unsuccessful searches and reported values of operating companies alongside exits. It is neither an arithmetic average of fund returns nor an acquisition-only investor return.1
The outcome table uses the 337 companies in Stanford’s Exhibit 7 ROI distribution. Their operating and terminal counts sum to 89 losses, 68 investments at 1–2x, 93 at 2–5x, 59 at 5–10x, and 28 at 10x or more. Each percentage equals its count divided by 337, multiplied by 100, and rounded to one decimal place. The broader count of 862 search funds is not the denominator for this table.
International and U.S./Canadian return aggregates are not averaged or pooled. Observation dates, maturity, and sample definitions differ. IESE’s younger portfolio is relevant to interpreting its lower reported aggregate, but does not prove that maturity explains the whole difference. Searcher characteristics associated with success are treated as associations rather than causal rules.
Company statistics are independent medians; fund-level search capital differs from capital per principal. Recent acquisition rates describe concluded searches within partially completed cohorts. Edition-to-edition counts may be revised, so this report does not reconstruct unreported annual launches by subtracting historical international totals.
Cite this research
CapitalPad Research, “Search Fund Statistics: The Case for Backing Owner-Operators.” Updated October 9, 2026.
Reference CapitalPad Research for the comparative analysis, explanations, calculated outcome shares, tables, and charts. Retain the provider, period, and sample when quoting an underlying study result.
Sources & references
- Kelly, Zenios & Ng, “2026 Search Fund Study: Selected Observations,” Stanford Graduate School of Business, case E-967 (30 June 2026; data through 31 December 2025). https://www.gsb.stanford.edu/faculty-research/case-studies/2026-search-fund-study-selected-observations
- Peter Kelly and Sara Heston, “2024 Search Fund Study,” Stanford Graduate School of Business, case E-870 (June 28, 2024; data through December 31, 2023). Source
- Kowalewski et al., “International Search Funds 2024,” IESE Business School, study ST-658-E (data through December 31, 2023). Source
- IESE Insight, “Search funds asset class maintains global growth” (2024). https://www.iese.edu/insight/articles/search-funds-global-growth/
- Stanford Graduate School of Business newsroom, “Stanford GSB’s Search Fund Conference Focuses on CEOs” (2025). https://www.gsb.stanford.edu/newsroom/school-news/stanford-gsbs-search-fund-conference-focuses-ceos
- IESE Insight, “Search fund model takes root in Europe and Latin America” (2018; historical international counts). https://www.iese.edu/insight/articles/search-fund-model-europe-latin-america/
- CapitalPad, “Search Fund Investing for Accredited Investors” and Investor Overview (accessed September 14, 2026). Search fund investing; Investor overview.
