Join 1,200+ investors reviewing deals
CapitalPad is one of the most widely used co-investment groups for search fund acquisitions in the lower middle market. We evaluate hundreds of deals each year and present only those that meet our financial and operational standards.
CapitalPad invests $500K to $2M in search fund transactions at the post-LOI acquisition stage. We bring a co-investor network of funds, family offices, and accredited investors to help you close. No cost to searchers at any stage.
CapitalPad for Investors
CapitalPad is for accredited investors looking for deal-by-deal access to search fund acquisitions in the lower middle market.
We partner with search fund entrepreneurs at the acquisition stage, backing operators who have identified and negotiated deals with established, historically profitable companies.
Build a portfolio of enduring, owner-operated businesses, one investment at a time.
CapitalPad evaluates hundreds of search fund deals each year and invests in fewer than 5%. Every deal presented to investors has been underwritten for operator capability, business quality, and return potential.
Search fund acquisitions target established, historically profitable companies with predictable revenue and real operating history, not venture capital bets. The model has a long track record of delivering strong risk-adjusted returns.
Search fund deal flow has historically required personal relationships with searchers or connections to MBA alumni networks. CapitalPad gives accredited investors direct access to vetted deals, structured and ready to evaluate.
We focus exclusively on search fund, independent sponsor, and ETA transactions. That means a capital partner who already understands your structure, your economics, and your timeline, and can commit quickly when your deal is ready.
All co-investors are consolidated into a single SPV. One line on your cap table, one wire at closing, and no managing individual investor relationships or staggered commitments.
CapitalPad is one of the most active co-investment groups for search fund acquisitions in the United States. Our team has direct experience in private equity and business operations, and stays engaged after close to help you grow and professionalize the business.
CapitalPad for Searchers
CapitalPad invests $500K to $2M at the post-LOI acquisition stage for search fund entrepreneurs. All investors are pooled into a single SPV, so you close with one counterparty instead of managing a fragmented cap table.
We work with searchers across both traditional and self-funded models. Whether you need gap equity to complete a raise or a co-investment partner to anchor it, CapitalPad can move from initial review to a commitment in as little as two weeks.
There is no cost to searchers at any stage. CapitalPad earns carry from its investors only when the deal performs.
CapitalPad for Investors
“CapitalPad makes the deal sourcing and logistics of search fund investing easy – I’ve already joined my first deal and am excited for more!”
CapitalPad for Investors
“CapitalPad makes the deal sourcing and logistics of search fund investing easy – I’ve already joined my first deal and am excited for more!”
CapitalPad for Searchers
“CapitalPad’s investment was invaluable for helping close our SMB deal. Highly recommended for searchers.”
CapitalPad for Searchers
“CapitalPad’s investment was invaluable for helping close our SMB deal. Highly recommended for searchers.”
CapitalPad was built by a team with direct experience in entrepreneurship through acquisition, private equity, and hands-on business operations. That background shapes how we evaluate search fund deals and support the operators we back.
Access vetted search fund acquisition opportunities in the lower middle market. Review each deal individually and invest with full transparency into the business, the operator, and the terms.
Get acquisition capital from a team that understands search funds. CapitalPad invests at the post-LOI stage, consolidates your investor base into a single SPV, and helps you close without unnecessary complexity.
An active and growing portfolio of search fund acquisitions across home services, healthcare, business services, manufacturing, and distribution. That depth of experience informs every deal we evaluate and every searcher we partner with.
CapitalPad is open exclusively to accredited investors. All investors must complete our onboarding and verification process before accessing deals.
$25,000 per deal for individual accredited investors. Institutional investors including funds, family offices, and SBICs are expected to allocate at least $750,000 per deal.
Investing in a search fund deal through CapitalPad works in a few steps. Once your account is approved, you access the CapitalPad dashboard. Each posted deal includes a full diligence package: deal memo, financials, tax returns, investor model, sources and uses, value creation plan, and a recorded interview with the searcher. You review the materials and decide whether to co-invest.
If you decide to proceed, you indicate your investment size in the dashboard. When the deal approaches closing, CapitalPad collects the committed capital and issues subscription documents for you to sign. The minimum investment to invest in a search fund deal on CapitalPad is $25,000 for accredited investors.
No. These are long-term, illiquid investments. You may receive distributions during the hold period, but most returns are realized when the company is sold. This long-term structure allows operators to focus on building value rather than optimizing for a quick exit.
CapitalPad charges a one-time 1.5% closing fee at the time of investment to cover administrative costs. There is no annual fee. Unlike the traditional private equity “2 and 20” model, CapitalPad does not charge an annual management fee.
CapitalPad also earns 20% of profits, but only after investors have received their full initial capital back. This structure ensures that CapitalPad only earns meaningful returns when investors do.
Institutional investors allocating $750K or more do not pay carry, as they invest directly.
A search fund is an investment vehicle through which an entrepreneur raises capital from a group of investors to find, acquire, and operate a single small-to-medium-sized business. The entrepreneur, known as the searcher, becomes CEO of the acquired company and runs it with the goal of growing the business and eventually exiting at a higher valuation. The broader strategy is known as Entrepreneurship Through Acquisition, or ETA.
The search fund model was first developed at Stanford Graduate School of Business in 1984 by Professor H. Irving Grousbeck. Harvard Business School professors Rick Ruback and Royce Yudkoff later helped popularize the concept through their MBA course and their book HBR Guide to Buying a Small Business. The model has since expanded to programs at Kellogg School of Management, Columbia Business School, MIT Sloan, Wharton, Tuck, Darden, and IESE Business School in Barcelona, which publishes the leading international search fund study.
Search fund investing follows a two-stage capital raise. In the first stage, the search phase, investors fund the entrepreneur’s full-time search for a target company. Typical search capital raises are $400K to $600K from 10 to 20 investors, with individual checks of $30K to $50K. This capital covers the searcher’s salary, deal sourcing tools, legal and accounting costs, travel, and operating expenses over an 18 to 24 month search process.
During the search phase, the entrepreneur typically screens hundreds of businesses, has serious conversations with 30 to 50 potential targets, and submits multiple letters of intent (LOIs) before closing on one acquisition. Search phase investors are making a bet on the entrepreneur’s ability to find and close a quality deal. If the search fails, this capital is largely or entirely lost.
In the second stage, the acquisition phase, the searcher raises a much larger pool of equity to fund the purchase of a specific target company. Acquisition equity raises typically range from $2M to $10M, often supplemented by SBA 7(a) loans or conventional bank debt covering 50% to 70% of the total purchase price. At this point, investors are evaluating a specific business with real financials, real customers, and a proven operating history.
Search phase investors typically receive a 1.5x equity step-up when the acquisition closes, meaning a $50K search phase investment converts to $75K worth of acquisition equity. This rewards early investors for bearing the blind search risk. Search phase investors also have pro-rata rights to invest additional capital at the acquisition stage.
CapitalPad invests exclusively at the post-LOI acquisition stage. We do not fund the search phase or provide seed capital for search vehicles. Our investors evaluate specific businesses with full diligence materials before committing capital.
Search fund entrepreneurs typically target established, historically profitable companies with the following characteristics:
These are not startups or speculative growth bets. They are described as “boring”, profitable, essential businesses with stable cash flows, long-term customer relationships, and predictable demand. Many are founder-owned businesses where the owner is approaching retirement with no succession plan, creating a natural acquisition opportunity as part of the broader baby boomer retirement wave.
The acquired company typically undergoes a CEO succession, with the search fund entrepreneur stepping into the leadership role post-acquisition. The new management team focuses on long-term value creation through operational improvements, revenue growth, and professionalization of the business.
Search fund entrepreneurs typically receive 20% to 25% of total equity, vesting over 4 to 5 years. Vesting is usually a combination of time-based vesting and performance vesting tied to investor return thresholds. Additional equity is often earned through step-ups if investor returns exceed defined MOIC hurdles (commonly 3x, 5x, or 7x).
Investors receive preferred equity with a liquidation preference, meaning they receive their capital back before the entrepreneur participates in profits. Standard investor protections include board representation (investors typically hold the majority of a 3 to 5 person board), quarterly financial reporting, approval rights on major decisions, and tag-along and drag-along rights.
The Stanford GSB Search Fund Study, published biennially, is the most widely cited dataset on search fund performance.
In a traditional search fund, the entrepreneur raises search capital from investors upfront to fund an 18 to 24 month search. Investors back the searcher before any target company has been identified. If the search succeeds, investors participate in the acquisition. If it fails, the search capital is lost.
In a self-funded search, the entrepreneur finances the search process out of pocket and raises equity only at the point of acquisition, typically alongside an SBA 7(a) loan and seller financing. Self-funded searchers retain significantly more equity (60% to 80%+ versus 10% to 25% in traditional search) because they bear the search risk themselves.
Self-funded deals tend to be smaller (enterprise values of $1M to $10M versus $5M to $30M for traditional search), close faster (53% within 12 months versus 19 to 20 months for traditional search), and transact at lower multiples (83% below 5.0x EBITDA versus a median of 7.0x for traditional search).
CapitalPad invests in both traditional search fund acquisitions and self-funded search deals at the post-LOI stage. We do not fund the search phase in either model.
Search fund entrepreneurs and independent sponsors both acquire companies on a deal-by-deal basis without a committed fund, but the profiles differ. Search fund entrepreneurs are typically earlier in their careers, often coming directly from an MBA program, and commit to finding and operating a single business. Independent sponsors are usually experienced private equity professionals or corporate executives pursuing larger, more complex transactions, often targeting $5M+ EBITDA companies with structured promote economics.
Search fund entrepreneurs generally target smaller companies in the $1M to $4M EBITDA range and take a hands-on CEO role post-acquisition. Independent sponsors may or may not step into an operating role, and they often pursue multiple deals over time. CapitalPad is an active investor in both search fund and independent sponsor transactions across the lower middle market.
The search fund community is built around a small number of conferences where searchers, investors, and service providers connect directly. The most notable events include:
For investors looking to build relationships with search fund entrepreneurs and for searchers seeking capital partners, these conferences are among the most efficient ways to access the search fund community.
Search fund investing has historically been concentrated among a small group of institutional insiders: Stanford GSB and Harvard Business School alumni, former search fund operators who became investors, and a handful of family offices and dedicated funds like Pacific Lake Partners, Search Fund Partners, and Anacapa Partners that developed deep expertise in the model.
Over the past several years, access has broadened significantly. Online communities like Searchfunder connect searchers and investors directly. Conferences draw attendees from outside the traditional MBA alumni networks. And co-investment groups now aggregate and curate search fund deal flow for accredited investors who want to evaluate individual opportunities without needing personal connections to operators.
CapitalPad is one of the most widely used co-investment groups for investing in search fund acquisitions in the lower middle market. We invest at the post-LOI acquisition stage, after the searcher has identified a target company and signed a letter of intent. Investors review full diligence packages for specific businesses before committing capital. We do not provide seed funding for the search phase.
For investors new to the asset class, the Stanford GSB Search Fund Study, the IESE International Search Fund Study, and HBR Guide to Buying a Small Business by Rick Ruback and Royce Yudkoff are the essential starting resources.
CapitalPad does not provide personalized investment advice or recommendations. All information made available through this website, including materials related to potential investment opportunities, is for informational purposes only and is not authored or guaranteed by CapitalPad.
Investors acknowledge and accept the inherent risks of investing in private securities, including the risk of a total loss of invested capital. Past performance of any entity, individual, or investment strategy is not indicative of, and does not guarantee, future results. Any forward-looking statements or projections are hypothetical in nature, may not materialize, and should not be relied upon as a guarantee of future performance.
Investors are solely responsible for conducting their own independent due diligence prior to making any investment decision. Investments made through CapitalPad are speculative, illiquid, not FDIC-insured, not bank-guaranteed, and may lose value. There may be no secondary market for these securities.
Investments may also involve limited or no voting rights. Investors should assume that they will not have influence over the management or operations of the underlying entity.
By participating, investors acknowledge that all investments involve significant risk and that neither CapitalPad nor its affiliates make any representation, warranty, or guarantee as to the performance of any investment.
CapitalPad invests at the acquisition stage, backing search fund entrepreneurs who have identified and negotiated a deal with an established, historically profitable business. We typically look for companies with at least $750K to $5M in EBITDA, which is the core range for search fund acquisitions. You’ll need an executed LOI, a clear path to close, and demonstrated capability to operate the business.
No. CapitalPad does not provide capital for the search phase. We invest exclusively at the post-LOI acquisition stage, once you have a company under LOI and are raising capital to close the transaction.
No. There is no fee for search fund entrepreneurs to raise capital through CapitalPad. Our economics come from carried interest on the investor side, which means we only make money when the deal performs.
CapitalPad can typically provide initial feedback within a few days. Formal commitments can happen in as little as two weeks when needed. More lead time usually means a larger check size. If your timeline allows, 30+ days is ideal.
We invest across sectors but focus on established, historically profitable businesses with low exposure to technology disruption. Common examples include business services, healthcare, home services, professional services, light manufacturing, and distribution. We do not invest in early-stage ventures, turnaround situations, or speculative growth bets. Our focus is US-based companies, with some exceptions made for Canadian companies