How Search Capital Works, and Why the Odds Have Moved

The two-stage structure is well documented. The base rate underneath it has changed, and the change matters more to someone starting now than any long-run average does.

A search fund is a two-stage arrangement, and almost everything confusing about it comes from people describing one stage while thinking about the other.

In the first stage you raise a small pool of capital from a group of investors. It pays your salary and your costs while you look for a company to buy. It is not a loan and it does not come back if you never buy anything. In the second stage, once you have a target and terms, you go back to those investors, and usually to others as well, to raise the equity that actually buys the business. The first cheque is small and speculative. The second is many times larger and is attached to a real company with real accounts.

That is the model. What is worth more of your attention is what happens in between, and how often it works.

The number most people quote is not the number you need

The Stanford Graduate School of Business has tracked search funds formed in the United States and Canada since 1984. Its 2026 Search Fund Study, published in July 2026 with data through 31 December 2025, covers 862 core search funds. It reports that, of all search funds that have concluded, 58% acquired a company.

For funds launched between 2021 and 2024 that had concluded, the same study reports a rate of 48%. In Stanford's words, roughly half of recent searchers acquired a company.

Before reading too much into the exact gap, note what both figures measure. Each counts only funds that have finished, one way or the other. The recent cohorts are not finished: Stanford notes that funds launched in 2021 and 2022 were 96% concluded, and funds launched in 2023 and 2024 only 42%. The recent figure will move as the rest of those funds conclude.

Stanford is clear, though, that the decline is real, and it gives two reasons: less favourable market conditions, including increased competition, and a wider range of preparedness among searchers as the model has become more popular. Its own estimate is that market conditions account for roughly half of the decline in recent years.

So the rate for people who started recently is not the rate in the long-run average, and the long-run average is the one you will be shown.

Denominators, and why the rates you read vary so much

The other reason acquisition rates appear to swing wildly is that they are calculated on different populations, and the population is rarely stated.

Take the international data. IESE Business School's International Search Funds 2024, published September 2024 with data through 31 December 2023, tracked 320 first-time core search funds formed outside the United States and Canada, across 40 countries. Of those 320, 121 were still searching or still fundraising. Fifteen had left the model altogether. Of the 184 that had concluded one way or the other, 146 had acquired a company and 38 had ended without one.

So 79% of concluded international funds acquired, which is the figure usually quoted. And 146 of all 320 funds raised had acquired by the end of 2023, which is 46%, because a large group had not finished yet.

Both are true. Neither is wrong. They answer different questions, and the one closest to "what happens to people like me" is the second, adjusted for the fact that the unfinished cohort will keep converting for years.

When you see an acquisition rate anywhere, including in a deck sent to you by someone raising money, the first question is what the denominator was.

What the raise actually buys you

Search capital buys time, and time is the only input that reliably distinguishes searchers who buy from searchers who do not. Stanford's 2026 study reports that, among companies acquired since 2020, the median search fund acquired after 20 months of searching. Stanford's 2026 primer on search funds notes that acquiring a company in a search fund process may take anywhere from two months to four years.

That range is the honest version. A two-year budget against a process that has taken four years at the far end is a real constraint, and it is the subject of the next article in this series.

Sources. Stanford Graduate School of Business, 2026 Search Fund Study: Selected Observations, case E-967, published July 2026, data through 31 December 2025, 862 core search funds formed in the United States and Canada since 1984; acquisition rates, cohort completion and attribution at pages 5 to 6; search length at page 6. IESE Business School, International Search Funds 2024: Selected Observations, ST-658-E, September 2024, data through 31 December 2023, 320 first-time core search funds outside the United States and Canada; acquisition status at Figure 2, page 8. Stanford GSB, A Primer on Search Funds, 2026 edition, case E958; search duration at Part V.

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.