Before There Is a Business to Diligence

When you have no target, there are no accounts to examine. What gets examined instead is you, your criteria, and how quickly you are moving.

An investor evaluating a searcher with a live deal has something to work with. They can read the accounts, test the customer concentration, and form a view on price. An investor evaluating a searcher with no target has none of that, and has to form a view on a person and a plan.

So the things that get weight are different, and they are more inspectable than most searchers assume.

The person

IESE Business School's International Search Funds 2024, data through 31 December 2023, reports on 447 international search fund principals. Among those who launched in 2022 and 2023, the most common professional backgrounds were management consulting at 26%, investment banking or financial services at 20%, and line or general management at 14%. Private equity accounted for 10% and prior entrepreneurial experience for around 4%. Across the same cohort the median age at the start of the search was 33, 71% held an MBA, and 68% launched within two years of finishing it.

The useful reading of that is not that one background is preferred. IESE's own framing is that successful searchers come from a wide variety of professional backgrounds and that many investors do not prefer any particular profile. The distribution tells you what the population looks like, not what gets funded.

The plan, and whether it is a real one

IESE reports that international searchers in 2022 and 2023 named proprietary approaches, meaning direct contact with owners, as a primary source of deal flow in 64% of cases, and third-party channels in 37%. Searchers could select more than one, which is why the figures exceed 100%.

The scale of that work is the part worth stating plainly. IESE reports that before an acquisition, the average searcher explored over three thousand businesses, held personal conversations with 159 owners, and signed approximately four letters of intent.

Four LOIs, three thousand companies. A sourcing plan that does not survive contact with those numbers is the thing an experienced investor is testing for.

Pace, and the one finding that is genuinely predictive

IESE collected data on when each search fund signed its first letter of intent. Searchers who ultimately acquired a business reached that point earlier, at month 7 on average, than those who ended the fund without an acquisition, at month 9 on average and with wider variance. In the 2022 to 2023 survey, nearly 40% of those who had not signed an LOI during the first 12 months did not acquire a business.

IESE is explicit that statistical significance cannot be established given the low number of observations, and that caveat travels with the finding. Treat it as a pattern worth knowing rather than a rule.

Stanford's 2026 study points the same way for searchers in the United States and Canada. Among those who launched between 2021 and 2024, searchers who signed a first LOI within six months acquired at a 74% rate, and those who signed within 12 months at 65%, against 48% for the cohort overall. Stanford presents these as correlations, not causes.

It is still the most actionable thing in either study for someone mid-search, because it points at a behaviour rather than a characteristic.

Why the ones that get that far still fail

Of international searchers surveyed for 2022 and 2023, the reported reasons a target under LOI did not become an acquisition were: something discovered during due diligence, 63%; valuation, 48%; seller retraction, 38%; competitive bidding, 32%; and lack of investor support, 27%. Principals could select every factor relevant to their experience, so these are frequencies rather than shares of a whole.

In the international data, lack of investor support is the least common of the five. Stanford's figures for searchers who acquired in 2024 and 2025 rank it higher, cited by 40% of respondents, but discovery in due diligence still leads, at 79%. Either way, most deals die in the deal.

Sources. IESE Business School, International Search Funds 2024: Selected Observations, ST-658-E, September 2024, data through 31 December 2023; principals' backgrounds at page 10 and Exhibits 1 and 2; sourcing at Figure 4; funnel and LOI timing at pages 11 and 15; reasons to forego acquisition at Figure 7. Stanford Graduate School of Business, 2026 Search Fund Study: Selected Observations, case E-967, July 2026; LOI timing and reasons at page 6.

These articles are published for information only. They describe how the search fund model is commonly structured and what published research reports about it. They are not advice, not a recommendation, and not an offer or invitation to invest in or to fund any search fund. Figures are drawn from the sources named in each article and are reported as at the data cut-off stated. Archimax has not verified the underlying data. Anyone considering taking or providing search capital should take their own legal, tax and financial advice.