Announcing: Self-Funded Search Investing Report

We’re excited to announce the release of the Self-Funded Search Investing Report in collaboration with Search Fund Ventures. 

This comprehensive guide is designed to help investors and operators understand the landscape of the self-funded search asset class, providing invaluable insights into the burgeoning self-funded search model, key market trends, investment opportunities, and more.

Why self-funded search matters

With an estimated $7.4 trillion in small business assets held by Baby Boomers and another $6.8 trillion by Gen X, the need for ambitious operators ready to guide the next generation of America’s small businesses has never been greater. The self-funded search model empowers motivated operators to acquire established, cash-flowing businesses, providing an attractive opportunity for investors to support small business growth while potentially earning attractive returns.

Our report explores why this model is gaining momentum while leveraging SBA 7(a) loans and increased investor awareness as a flexible acquisition option that has seen consistent growth despite macroeconomic fluctuations.

Download the report here.

How the report is designed 

1. Overview of the self-funded search asset class

The guide begins with an overview of the self-funded search asset class, discussing how it has evolved into a flexible and scalable model for operators to acquire small businesses. It provides key data on the types of businesses targeted, common company profiles, and the strategies that searchers use to create value post-acquisition. Readers will gain insight into the backgrounds of these operators, many of whom come from finance, consulting, or operational roles, and how their skills align with value-creation strategies, such as organic growth, operational improvements, and technology implementation.

2. How the acquisition process of a self-funded search deal is structured 

Next, the guide outlines the acquisition process in detail, from sourcing deals and conducting due diligence to closing transactions. Investors are introduced to the materials they can expect to review, such as teasers and financial models, and the importance of diligence workstreams to vet each opportunity thoroughly. This section provides a step-by-step look at how a typical deal unfolds, offering investors a roadmap to navigate the entrepreneurial acquisition process alongside the searcher.

3. Key terms and concepts investors and operators should know 

Finally, the guide synthesizes key investment concepts and terms, providing a detailed look at deal structures, equity and debt financing, and the role of SBA loans in facilitating acquisitions. It also covers the emerging trends in the space, helping investors understand the current market dynamics, key risks, and opportunities. Armed with this information, investors will be well-prepared to engage with entrepreneurial acquirers and evaluate investment opportunities in this growing and evolving asset class.

Key highlights from the report

1. Market Overview and Growth:

   • The self-funded search model has seen substantial traction, fueled by SBA 7(a) loan programs that allow up to 90% loan-to-value (LTV).

   • This space reflects a compelling investment alternative to venture capital, which has experienced large swings in annual deal volume, while small business acquisitions remained steady at $38 billion in deal volume in 2024.

2. Investment Returns:

   • Historically, self-funded searches have offered impressive returns, with ~30% average IRRs—on par with traditional search funds.

   • Investors benefit from equity "step-ups," where they gain a larger share of the company’s equity as a multiple of their contributed capital (ie, “2x step-up).

3. Acquisition Targets:

   • Most targets have enterprise values between $4M and $12M and EBITDA ranges between $1M and $4M, providing a sweet spot for small-scale acquisitions.

   • Top industries include home services, B2B services, and manufacturing, with value-creation strategies centered on operational improvements and growth.

4. Investor Terms:

   • Preferred dividends range from 10% to 12%, offering attractive cash flow potential.

   • Investors typically account for 10%–30% of total capital, while searchers contribute less than 2% of equity.

Keeping small businesses in local communities 

Self-funded search not only represents a lucrative investment opportunity but also facilitates the continuation of small business legacies as retiring owners transition their life’s work to hardworking, talented operators. Locally-owned businesses benefit their communities in a variety of ways:

• Small businesses donate 250% more than large businesses to community causes.

• Over 48% of every dollar spent at a local business is reinvested in the community compared to just 13% of every dollar spent with major chains.

• Local businesses generate 70% more local economic activity per square foot than big box retail stores

Empowering your investment decisions

The Self-Funded Search Investing Report is filled with data, actionable insights, and expert analysis to help you:

• Understand key trends in the self-funded search ecosystem.

• Evaluate operators effectively.

• Build a robust investment strategy within this growing asset class.

Download your copy today

Whether you're a seasoned investor or exploring self-funded search for the first time, this report is your go-to resource for making informed decisions in the small business acquisition landscape.

Download the Self-Funded Search Investing Report now and take the first step toward unlocking the potential of this high-growth asset class.

Information posted on this page is not intended to be, and should not be construed as tax, legal, investment or accounting advice. You should consult your own tax, legal, investment and accounting advisors before engaging in any transaction.