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What is a Search Fund? // Episode 40

Laura DiFrancesco

Mar 3, 2026

Curious how search funds work in entrepreneurship through acquisition? This episode breaks down the fundamentals, including how search funds are structured, the phases of the process, and the roles of both searchers and investors. Learn why aligning incentives matters, what legal and ethical responsibilities come with raising capital, and the advantages and challenges of this acquisition model.

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Thank you for tuning into another episode of Dealmaking with Laura DiFrancesco! Today we covered what the fundamentals of a search fund look like, including how they operate, the phases involved, and the responsibilities of both searchers and investors. Laura emphasizes the importance of aligning interests between searchers and investors, discussing the ethical and legal obligations that come with raising capital. She also highlights the advantages and challenges of using search funds. 


What You’ll Learn


The Basics of a Search Fund

// A search fund is where you raise capital from investors. This can include either yourself as an individual searcher, up to three other people. This then raises capital to fund a full time search. Initially this will cover living expenses and searching costs. When working with an investor, it is important to consider how hands on you would like them to be and how that will impact you and your business. 


The Different Phases

// The first phase is the search phase. This includes not only building relationships with your potential investors, but also showing up prepared to do the hard work through time and research. The second phase is the acquisition phase. This is when you are under LOI, completing due diligence, negotiating transaction documents, preparing for closing, preparing for your post-closing strategy, and exit strategy.


Advantages and Challenges

// The number one advantage of a search fund is that it is proven that it provides a significant opportunity for success, especially access to capital. Increased attraction to investors is another, they like to know that they will have a bigger return on their investment because they invested earlier. A challenge could be that it may have a longer time frame. 



Episode Highlights:

[2:49] What is a search fund?

[9:45] Phase one - the search

[14:10] Phase two - the acquisition phase 

[15:19] Advantages and disadvantages 

[18:48] Outro 


Resources Mentioned


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Credits

Host // Laura DiFrancesco

Executive Producer // Teagan Rowland 

Editor // Ava Balliet


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