What is a search fund? Profitability and succession

Still don't know what a search fund is? In this article, you will learn:

• What is a search fund?
• Difference from other types of investors
• Advantages and disadvantages of a search fund
• When is it more appropriate? 
• Search funds in Spain
• Success cases 

What is a search fund?

A search fund is a pool of capital raised by a management team with entrepreneurial aspirations. Its purpose is to search and acquire a private company with an enterprise value (EV) between $5 million and $30 million usually. 

Funds are generally obtained from high net worth individuals who believe in the skill set of the management team that will manage the fund and the investee company. 

Difference from other types of investors

The difference between search funds and traditional private equity funds lies in the fact that the fund's promoters not only seek to acquire a company, but also to actively lead it once the transaction is complete. It is a model closer to a management buyout, where the manager becomes the new CEO of the acquired company.

Although historically many search funds have been promoted by graduates with limited experience, in recent years the diversity of profiles has increased. It is increasingly common to find entrepreneurs with backgrounds in strategic consulting, investment banking, operational management in large corporations, and even founders of start-ups seeking to lead a more stable project or one with consolidated growth.

In this model, fund investors not only contribute capital, but also provide strategic support, mentoring, and access to a relevant network of contacts to maximise the chances of success.

Advantages and disadvantages of a search fund

When is it most appropriate to opt for a search fund? 

Baker Tilly International's search funds represent a particular type of buyer for entrepreneurs seeking an orderly exit, especially in profitable businesses without a clear successor or in need of leadership renewal.

This model allows an entrepreneur, backed by a group of investors, to identify and acquire a company with potential. In the first phase, the entrepreneur convinces investors to finance their salary and search expenses for one or two years. If they find a suitable company, a partnership is created (the search fund properly speaking) to channel the acquisition.

Traditionally, developers were young people with a financial or academic background. However, today it is increasingly common to see searchers with previous experience in large corporations, strategic consulting firms, technology companies, or even serial entrepreneurs seeking a more stable company to lead in the long term.

This model is particularly suitable for:

• Business owners who wish to sell but remain involved for 2–5 years during the transition process.
• Owners who value a committed generational handover, with continuity in the company culture.
• Growing businesses that need to professionalise their structure and open up new strategic lines, without the pressure of an immediate exit.
• Technology or industrial companies facing scale limitations or barriers to their next phase of expansion.

Unlike other financial investors, search funds do not necessarily impose the sale of the company within a 3–5 year timeframe, which alleviates pressure for short-term results and allows value to be built with greater stability.

Search funds in Spain

In recent years, Spain has established itself as one of the most active ecosystems for search funds in Europe. According to European Search Fund Study 2024 (IESE Business School and Stanford GSB), Spain currently represents the 22% of all new funds created in Europe, second only to the United Kingdom. The study identified more than 60 Spanish searchers who are active or in the search phase, representing a cumulative growth of 80% compared to 2020 data.

This boom can be explained by several factors:

• Greater awareness of the model, driven by initiatives such as the IESE Search Fund Center, which has trained dozens of entrepreneurs.
• The growing interest of local and international investors in supporting projects with high potential for profitability.
• The existence of a network of small and medium-sized family businesses undergoing succession or professionalisation processes, often without a clear successor.

Although it has traditionally been pointed out that the strong family business culture in Spain hindered the development of the model, the reality is changing. More and more entrepreneurs see in the search fund An orderly, professional and committed exit, especially in sectors such as B2B services, light industry, niche technology and healthcare.

Among the search funds most active or representative in recent years are Lomba Capital, Ariol Capital, N Capital, Kaizen Partners, Punto Cero Capital and Transición. Many of them are backed by a network of investors with experience in venture capital, consulting, or entrepreneurship, and have begun to generate their first acquisitions and exits.

Success cases 

Over the last four years, several search funds in Spain have completed notable acquisitions, demonstrating the strength of the model and its fit within the country's business fabric. Here are some representative examples:

• Ariol Capital – Acquisition of Global Anatomics (2022)

Founded by Iñaki Apezteguía and Xavier Parés, Ariol Capital acquired the company in 2022 Global Anatomics, which specialises in the distribution of surgical implants for traumatology and neurosurgery. The company, based in Barcelona, was a well-established family business looking for a generational change.
Since the acquisition, the company has experienced steady growth, product expansion, and organisational restructuring.

• Kaizen Partners – Acquisition of Renewable Efficiency (2023)

The fund led by Javier García and Marta Pérez completed the purchase of Eficiencia Renovable, a company dedicated to solar self-consumption solutions for SMEs. The operation focused on taking advantage of the boom in the energy transition and professionalising a business founded by technicians with little commercial structure.
Kaizen has managed to double sales in less than two years by incorporating digital channels and scalable operational processes.

• Punto Cero Capital – Acquisition of Grupo TCS (2024)

Punto Cero Capital acquired Grupo TCS, a Valencian company specialising in industrial labelling solutions. The aim was to strengthen its growth by expanding into new sectors such as logistics, pharmaceuticals and food. The transaction was completed with international co-investors and has been an example of a smooth transition from the founder to the new management team.

• Transition – Acquisition of Riosol Oliva (2023)

The search fund led by Canadian David Jacq, with the participation of investors such as the Cabiedes brothers and William P. Egan, completed the purchase of Riosol Oliva, a family business dedicated to the production of vegetable oils with a strong presence in exports.
The aim of the operation was to maintain brand identity, professionalise management and boost international markets. In less than two years, the company has increased its net exports by 35%.

These cases reflect how the model of search fund can be successfully adapted to the Spanish context, especially in companies with good profitability, growth potential, and professional succession needs. In all of them, the new management team has taken operational control, providing strategic focus, efficiency, and a new phase of expansion.

The future of search funds

The model of search fund has established itself in Spain as a real and professionalised alternative for business continuity. In an environment where many SMEs face the challenge of succession, search funds offer a solution that combines patient capital, strategic support and committed operational leadership.

The growing sophistication of promoters—many with previous experience in large corporations, consulting, or entrepreneurship—has raised the bar for the ecosystem. This has led to greater confidence among sellers and an evolution of the model towards more ambitious acquisitions, with technological components, international expansion, or advanced professionalisation.

According to Jan Simon, director of IESE International Search Fund Center, ‘the search fund has gone from being an academic experiment to a recognised asset class, with very attractive risk-adjusted returns, especially in fragmented markets such as Spain.’

For his part, Jim Ellis, professor emeritus at Stanford University and a leading figure in this field, states that ‘the key to the future success of the model will lie in maintaining the alignment of interests between entrepreneurs and investors, without losing sight of the operational essence of the approach.’

Looking ahead to the coming years, sustained growth in new funds is expected in Spain, as well as greater professionalisation in areas such as due diligence, technology, and post-acquisition reporting. Expansion into less explored regions (Galicia, Castile and León, Andalusia) is also anticipated, as well as an increase in acquisitions in sectors such as healthcare, cybersecurity, industrial services, and educational technology.

For entrepreneurs seeking to continue their legacy, and for professionals who want to lead a purpose-driven company, search fund are now positioned as a strategic, flexible and increasingly mature tool.