Traditional/Self-Funded/Single Sponsor Models

searcher profile

January 30, 2019

by a searcher from University of Pennsylvania - The Wharton School in Silicon Valley, CA, USA

I'm new to search funds. Can someone from the community please explain the differences between Traditional, Self-Funded and Single Sponsor search fund models? If a Self-Funded model means that the searcher puts in all the capital to fund the search, then is it necessary to actually form an LLC to house one's own search capital?  

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commentor profile
Reply by a searcher
from University of Wisconsin in Middleton, WI, USA
It is a good start to form an LLC. 1- Once you actually pay to start you are more likely to work more. 2- An LLC keeps the liability away from you personally and if there is anything wrong it affects the company but never you. 3- It can give you some tax benefits. 4- When you go ahead and form an LLC, do a little search or hire someone to do it for you if you have a lawyer, but mostly you can do an online search of potential XYZ. LLC name match up in another country so you might then want to choose another name so you don't get into a potential lawsuit if the other company have ever decided to move into your country and found out you have the same name and you didn't want to sell your company for them. These things may have a very little chance of happening, but in order to be a great business man you must not leave any room for error.
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Reply by a searcher
from University of Texas at Austin in Lexington, KY, USA
If self-funded, not necessary to form an LLC but will probably see some tax benefits with your ability to write-off additional expenses (Schedule C). I have an existing LLC that I run expenses through (but will create new one(s) upon acquisition) so I'm not sure how the tax law changes from last year and the limitation on writing off employment related expenses impact those trying to write-off search expenses.


In most states its fairly easy and inexpensive to set-up an LLC, get your FEIN and open a bank account. Also, might help with budgeting. You can do all the setup on your own in a couple of hours,
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