Traditional vs. Self-Funded Search?

July 17, 2025

by a searcher in Toronto, ON, Canada

[Update: Thanks everyone for the insights shared. I continue to reach out to many of you for follow up conversations] I recently listened to a podcast discussing the pros and cons of traditional vs. self-funded search. As a consultant, I know it depends which is why I'd love to hear from those who have experience with either path. * Are there self-funded searchers who, in hindsight, wish they had pursued a traditional route? * Or traditional searchers who now wish they had gone the self-funded route? Feel free to share your insights here or via DM if preferred. Thanks!"

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Reply by a professional
from University of North Carolina at Chapel Hill in Atlanta, GA, USA

Hi ^redacted‌ - I've pursued both self-funded and traditional searches, and I'm a strong proponent of the self-funded approach. The biggest benefit of traditional is 1) the salary that de-risks the searching phase and 2) no PG on the loan, but everything else about the traditional search could be replicated in self-funded. You can still build the support system, access to capital, etc. But self-funded let's you keep control, which means that you can pursue companies large and small, you can leverage SBA-financing on a lower growth business and still generate a strong return, and you lean on brokered deals, proprietary, or both. If you don't need the salary or can find a way to search while still working full-time, then I think self-funded is the best way to go.

Reply by a searcher
from The University of Chicago in Miami, FL, USA

It really depends on your personal situation; I would also consider the deal activity by size range in the region you're planning to search. At a high level, theoretically traditional search funds give you 1) salary (so less risk while searching), 2) access to larger pool of capital but 3) much lower resulting equity share and control of the business. You will also need to hit high IRR hurdles to get full carry.

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