Khaled Azar 
The most surprising number in the 2024 Stanford Search Fund Study is not the 35.1% aggregate IRR. It is the exit IRR: 42.9%, up from 36.8% in the previous study. A handful of high-return exits in 2022 and 2023 pulled that number sharply upward. For tech founders thinking about selling, that spike tells a clear story. The buyers who came through search funds during those years found something worth paying for. The question is whether your business has it.
Stanford’s Center for Entrepreneurial Studies has tracked search funds since 1984. This latest report, authored by Peter Kelly and Sara Heston, covers 681 funds formed in the U.S. and Canada through December 31, 2023. It is the most comprehensive dataset we have on this buyer class. And for sellers, the data contains signals that are easy to miss if you only read the headlines.
The Numbers That Matter for Sellers
A record 94 search funds launched in 2023. That is 94 new buyers actively looking for companies like yours.
Search funds are not private equity. They are typically one or two MBA graduates who raise capital from a small group of investors, then spend 18 to 24 months searching for a single company to acquire and run. The median search in 2022-2023 lasted 20 months. They are patient, focused, and increasingly well-funded.
The median purchase price dropped to $14.4 million from $16.5 million in the previous study. The median EBITDA multiple held at 7.0x. Median EBITDA at purchase was $2.2 million with a 27% margin. These are real numbers from real transactions, not theoretical multiples from pitch decks.
Search fund acquisition multiples held steady despite tighter monetary policy. Median target: $2.2M EBITDA, 27% margins, 25% growth rate.
What stands out is the growth rate. The median EBITDA growth at purchase was 25%. Search fund buyers are not buying stagnant cash flows. They want businesses that are growing, profitable, and operationally sound. If you are running a tech company in that range, you are exactly what 94 new search funds were hunting for last year.
Where Search Funds Are Buying
Healthcare and business services each claimed 25% of all search fund acquisitions. Software and technology took 22%. Tech-enabled services accounted for another 16%. Combined, tech-related businesses represent nearly 40% of the acquisition target pool.
That share has shifted. The study notes fewer pure software acquisitions in the 2022-2023 cohort, which contributed to the lower median purchase price. Software companies tend to command higher valuations due to their recurring revenue profiles. But tech-enabled services, where technology is the backbone rather than the product, are gaining ground.
At Livmo, we see this trend in our own deal flow. Buyers increasingly want businesses where technology creates operational leverage, not just another SaaS platform. If your tech company powers a service business with sticky customer relationships and strong margins, you are positioned well for this buyer class.
Search funds acquired tech and tech-enabled businesses in 38% of all deals. Operational leverage and strong margins matter more than pure software status.
Returns Tell a Story About Quality
The aggregate 35.1% IRR held steady. But the distribution underneath it is what sellers should study.
The overall IRR for all 681 search funds was 35.1%, nearly unchanged from 35.3% in the 2022 study. ROI came in at 4.5x, down from 5.2x. On the surface, that looks like a slight decline. It is not.
The exit IRR jumped to 42.9%. That increase was driven by a small number of outstanding exits in 2022 and 2023. Meanwhile, the 57% acquisition rate has held steady for a decade, and losses among acquired companies have ticked upward. The gap between winners and losers is widening.
This pattern is familiar to anyone in M&A advisory. The best businesses attract multiple offers and command premium terms. The rest struggle. Search fund data just makes this visible across hundreds of transactions.
For the 2017-2020 acquisition cohort, the IRR exceeded 50%. That cohort benefited from favorable economic conditions and the COVID-era tailwind that lifted tech valuations. But even accounting for timing, the data is clear: well-prepared companies bought by competent operators generate exceptional returns.
What Search Fund Buyers Actually Want
Partnered searches (two co-searchers) generated a 40.5% IRR versus 30.3% for solo searchers. But five of the six deals that returned 10x or more in the past two years were led by solo searchers. The partnership question matters less than the quality of the target.
Search fund entrepreneurs are young. Most are 35 or under. In 2023, 18% of new searchers were women, a sign of broadening diversity in the buyer pool. The median CEO salary post-acquisition was $190,000. The average equity held by entrepreneurs still operating their acquired company was $6.09 million.
These are not absentee investors. They are rolling up their sleeves and running the business for six to ten years. That changes what they look for in a target. They want:
- Clean operations — documented processes, clear org charts, systems that run without the founder.
- Predictable revenue — recurring contracts, low churn, diversified customer base.
- Growth headroom — the 25% median EBITDA growth rate is not a floor, it is a preference.
- Reasonable scale — $2M to $5M EBITDA is the sweet spot for traditional search funds.
If you are building with an eventual exit in mind, these criteria should shape your operational decisions today. Our Sellability Checklist maps directly to the factors search fund buyers evaluate during diligence.
Geography No Longer Limits the Buyer Pool
Only 35% of search fund acquisitions occurred in the same state where the search was based, down from 43% in 2018. The buyer pool is national. Internationally, 111 new search funds launched outside the U.S. and Canada in 2022-2023, with first-time acquisitions in several new countries.
This matters for tech founders in secondary markets. Your buyer is no longer limited to local acquirers or regional PE firms. A search fund based in Boston will buy a software company in Austin or a tech-enabled services firm in Nashville. The only requirement is that your business meets the quality threshold.
Geography is no longer a constraint. With 94 new search funds and declining same-state acquisitions, the right buyer could come from anywhere.
What This Means If You Are Considering an Exit
The Stanford data confirms what we tell our clients at Livmo: the buyer landscape for quality tech businesses has never been deeper. Search funds represent a growing, well-capitalized, motivated buyer class that did not exist at this scale a decade ago.
But the data also shows that the gap between good exits and bad ones is widening. The companies that earned 42.9% exit IRR for their acquirers had something specific: clean financials, strong growth, operational maturity, and a business that could thrive without its founder.
If you are running a tech or tech-enabled business with $2M to $5M in EBITDA, you sit in the exact center of search fund demand. The question is not whether buyers exist. The question is whether your business is ready for the scrutiny of a buyer who plans to run it for a decade.
Frequently Asked Questions
What is a search fund and how does it differ from private equity?
A search fund is an investment vehicle where one or two entrepreneurs raise capital to find, acquire, and operate a single company for 6 to 10 years. Unlike private equity firms that manage portfolios of companies, search fund operators commit to running one business full-time. The median search fund acquisition in 2022-2023 was $14.4 million at 7.0x EBITDA, typically smaller than PE targets.
What size business do search funds typically acquire?
Traditional search funds target companies with $2M to $5M in EBITDA, translating to purchase prices between $10M and $30M. The median purchase price in the 2024 Stanford study was $14.4 million with $2.2 million in EBITDA and 27% margins. Self-funded searchers often target smaller deals in the $1M to $10M enterprise value range.
Are search funds a realistic exit path for tech companies?
Yes. Software, technology, and tech-enabled services accounted for 38% of all search fund acquisitions in the Stanford study. A record 94 new search funds launched in 2023, and the aggregate IRR of 35.1% demonstrates strong returns that attract continued investor capital into this buyer class.
Next Steps
The search fund buyer pool is deeper than ever, and they are looking for businesses exactly like yours. We will benchmark your metrics against what search fund acquirers pay premium multiples for and map your path to a strong exit.