90% Failure Rate?

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August 15, 2025

by a searcher in Charlotte, NC, USA

I just read this article and it claimed a 90% failure rate for search funds. Whut. That is wildly higher than I have ever heard. Do you think that is true? What are current rates in your view? https://etonvs.com/ma/why-most-search-funds-fail/
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Reply by an investor
from McGill University in San Diego, CA, USA
It depends on how one measures success/failure. Lately, only about half of "traditional" searchers find businesses to buy (historically closer to 2/3). Post acquisition, very few end up generating sizable economic outcomes (Only 15% of those that purchased businesses generate an ROI in excess of 5x the investment). You put the two stats together and I suppose that's how you get to a "10% success" rate. This data is comes from the 2024 Stanford Search Fund Research Overview (page 10). There also aren't any published official numbers for self funded searchers, but I would be surprised if the numbers were any better. Self funded searchers generally (though, not always) buy smaller (read:riskier) businesses, with more leverage, no institutional investors, no playbooks and on a shoe string budget.
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Reply by a searcher
in Jaipur, Rajasthan, India
It seems close to true to me. Process of finding the business to acquire is so tiring and time taking, and often who do it themselves without any help don't take it long enough to find the business. The ones who do take help sometimes end up spending much more money than they intend to and start thinking it like a waste of money. So the stat seems to be pretty true to me.
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