A "search fund" or "searchfund" is an entity set up for the acquisition of a single business. It is one of the fastest and most reliable ways for an ambitious manager to become the CEO of a sizable company.
These managers are known in the community as "searchers". Because searchers are usually first time CEOs, they surround themselves with a network of experienced investors and advisors who not only provide financial backing but also help to run the acquired companies.
Searchers generally bring only minimal capital to the deal. Their value lies in their leadership and ability to source and close the transaction. The deals are mostly funded through a combination of debt and outside capital.
The idea of taking relatively younger professionals and mentoring them into CEO roles can be credited to Stanford professor H. Irving Grousbeck who funded the first searcher in 1984.
Once upon a time, searchfunds were an exclusive club only available to graduates of Stanford GSB and Harvard Business School. Today, the model is taught at most of the top MBA programs around the world.
The investors and lenders have grown from a select group of high net worth individuals tied to Harvard and Stanford, to hundreds of private investors, family offices, and private equity firms willing to back individual buyers.
Outside of top business schools, searchers come from various backgrounds. What unites them is the desire to be company owners and the acumen necessary to be successful CEOs.