Interesting Data from the 2022 Stanford Search Fund Primer

Over the past 2 years, $776M of equity was invested at a median purchase price of $16.5M per deal. 

The median financial metrics of acquired companies are: 

• Revenue: $6.4M
• EBITDA: $1.7M
• EBITDA Growth: 17%
• Multiple: 7.3x

In 2021, searchers deal-sourced a median of 200 companies, down from 285 companies in 2020. Similarly, searchers on average search for 17 months in 2021, down from 23 months in 2020. 

This past year, 34% of searchers concluded the search process without an acquisition. This matches the acquisition rate from 2020. 

Returns remain incredibly strong. Traditional search fund partnerships on average generate a 40% IRR while self-funded solo searches generate an average of 27% IRR. 

These returns translate to considerable financial compensation for both investors and searchers. On average, the equity earned per entrepreneur per year is $2M for currently operating companies and $1.45M for exited entrepreneurs. 

Looking at the demographic shifts within search, the number of female search entrepreneurs increased to 13%. Around 60% of search fund entrepreneurs are white and 40% are of non-causasian ethnicities.