Based on the Stanford GSB 2026 Search Fund Study (Case E-967)
The search phase is the least glamorous stretch of the entrepreneurship-through-acquisition journey and the one where the outcome is most decided. Stanford's 2026 Search Fund Study, covering 862 funds over four decades, puts hard numbers on what has always been folklore: how long the search really takes, why deals die, and what separates searchers who close from those whose funds quietly wind down. If you are about to launch, or are mid-search and wondering whether you are on track, here is your benchmark.
Fundraising is the easy part, statistically. The most recent cohort took a median of three months to raise, essentially unchanged for a decade. What has changed is the size and the cap table. Searchers now raise a median of $550,000 per principal, up 10% from the prior cohort and more than double what the 2008-09 searchers raised, from a median of 13 investors, continuing a steady drift down from the 15-16 investors typical of earlier cohorts.
The takeaway: fewer, larger checks. Your investor group is getting more concentrated, which makes each investor's judgment, network, and follow-on appetite matter more. Choose backers for what they bring after the wire, not just the wire.
Searchers also earn a livable salary while searching, a median of $148,000 in the latest cohort, which is worth knowing when you model the personal economics of two years without a deal.
The overall historical acquisition rate is 58%, but for funds launched from 2021-24 it fell to 48%. Stanford attributes the drop to two forces in roughly equal measure: tougher market conditions, including more competition for good companies, and a wider range of preparedness among searchers as the model has grown popular.
That second factor is the actionable one. When the researchers controlled for preparation, searchers from the two MBA programs with the deepest search fund history saw only a 9% relative decline in acquisition rates, versus 18% across all searchers. Preparation, not the market, explains about half the gap.
Among companies acquired since 2020, the median successful search took 20 months from launch to close, and the full distribution is wide: 15% of acquirers closed within 11 months, 36% in months 11-20, 33% in months 21-30, and 17% took 31 months or longer.
The more useful milestone is the first letter of intent. Searchers who acquired in 2024-25 signed an average of 2.5 LOIs, with the first coming around month seven. And early momentum is strongly predictive: searchers who signed an LOI within their first six months went on to acquire 74% of the time, and within twelve months, 65%, against a 48% baseline for the cohort.
Read that as a diagnostic, not a deadline. If you are eight or nine months in without a signed LOI, the data says your process needs to change: broader top of funnel, different channels, a sharper thesis, or more honest criteria, rather than simply more months of the same motion.
Two and a half LOIs per completed acquisition means most signed deals fall apart. The reported causes, in order:
Discovery in due diligence (79% of searchers cited it). The most common deal-killer is finding something material after signing: customer concentration that was hand-waved, revenue quality that does not hold up, accounting surprises. The defense is front-loading diligence questions before the LOI, especially around revenue durability and the financials' reliability, so fewer surprises survive to the expensive stage.
Valuation gaps with the seller (45%). Sellers anchor high, and in a market where the median purchase price has climbed to $16 million, bridging the gap takes structure: earn-outs, seller notes, and equity rollovers, not just a bigger number.
Lack of investor support (40%). Two in five searchers lost a deal because their own cap table would not fund it. This is partly deal quality and partly communication. Investors who first hear about a target at the LOI stage are being asked to underwrite from a standing start. Searchers who socialize their thesis and pipeline continuously get faster, warmer answers when it counts.
Search with a partner. Partnered searches launched from 2021-24 acquired at a 58% rate versus 43% for solo searchers, and partnered searches are also associated with higher eventual returns. The market has noticed: just over a third of new funds now launch with two principals, up from 19% in 2022-23. Partnership is not free (you split the equity), but the data keeps saying two searchers close more deals.
Bring real experience. Searchers with more than two years of post-graduation experience acquired at 55%, versus 40% for those with a year or less. The best-performing cohort in history, the 2008-09 searchers who acquired at an 86% rate, carried a median of four years of post-MBA experience into the search. Sellers of $2-3M EBITDA companies are handing over their life's work; credibility compounds.
There is also a preparation signal in coursework: 61% of the newest cohort took an ETA course before launching, up from 37% four years earlier. The searchers you are competing against are increasingly showing up trained.
The profile of what search funds actually buy has stayed remarkably stable, and it is worth calibrating your funnel to it: companies with roughly 25% EBITDA margins, high recurring revenue, and 30-40 employees, concentrated in services, software, tech-enabled services, healthcare, and increasingly education. Most searchers (52%) end up buying in the same state or region where they search, so proximity is not a constraint to fight; it is a sourcing advantage to use.
High recurring revenue deserves special emphasis: it is one of the factors most consistently associated with higher eventual returns, because predictable cash flow buys a new CEO time to learn the business before having to improve it. A mediocre company with contracted revenue is often a better search outcome than an impressive one where every January starts at zero.
The search phase rewards process discipline over brilliance. Raise from investors who will actually help, build a funnel calibrated to the businesses search funds genuinely buy, front-load your diligence so signed LOIs survive, keep your investors close long before you need their yes, and treat month six without an LOI as a signal to change the process, not the calendar. Roughly half of your cohort will not close a deal. The data is unusually clear about which half you can choose to be in.
Part of the Five Experts series on the search phase of the ownership journey. New to the model? Start with our breakdown of Stanford's 2026 Search Fund Study for aspiring searchers.
