I don't know the stat on how often it happens, but because they CAN fire you is one of the reasons I don't like traditional funded search model. It is good for 25 year old recent MBA's with no experience, but for mid career people with experience the deal sucks.

I don't know the stats, but I suspect it's very unusual only because the traditional search fund investors already have developed a relationship with the searcher. If they aren't sure about that person, they can simply refuse to invest in the acquisition and cut their losses. Moreover, most investors are in multiple deals, so an acquired business not doing well because of hard-to-foresee events is just part of the price of doing business. (And, they hope their portfolio of investments as a whole does well enough to mitigate outlier losses.) But as ^redacted‌ points out, it is certainly possible.