Search funds and family offices represent two radically different investment models. Understanding their differences is essential for choosing the right partner when the time comes to bring in an investor.
The search fund model has gained significant traction in Spain over the past five years. Imported from the United States — where it originated at Stanford Business School in the 1980s — the search fund model involves a young entrepreneur (the “searcher”) who raises capital from investors, uses it to find and acquire a single company, and then runs that company as CEO.
It is an innovative model, and it has produced notable successes. But it is fundamentally different from the family office model, and business owners considering both options should understand the differences before making a decision.
A searcher raises an initial fund (typically 300,000-500,000 euros) from a group of investors to finance the search process — their salary, travel, legal costs, and due diligence expenses. Once they identify a target company, the investors decide whether to fund the acquisition. The searcher typically acquires 100% of the company and becomes its CEO, with the investors providing the equity and debt financing.
The searcher receives a significant equity stake (typically 20-30% of the company) as compensation for finding and managing the investment. The investors receive the remaining equity and expect a return within five to seven years, typically through a sale of the company.
Search fund. The searcher is typically a recent MBA graduate (age 28-35) with limited operational experience. They may have worked in consulting, banking, or corporate roles, but they have usually not run a company before. Their ambition and energy are genuine, but their experience managing a business through cycles, crises, and complexity is limited.
Family office. The investment team typically has decades of experience investing in and managing companies. The decision-makers have seen economic cycles, market downturns, and operational challenges — and they know how to navigate them.
Search fund. The searcher’s investors expect a return within five to seven years, creating an inherent pressure to grow the company quickly and sell it at a premium. This is similar to private equity in its time-bound nature.
Family office. Patient capital with no predetermined exit date. The investment can be held indefinitely, as long as the company continues to create value.
Search fund. The searcher becomes the CEO and runs the company day-to-day. This can be a strength (full commitment) or a weakness (limited experience, potential cultural clash with existing employees).
Family office. The investor does not typically replace the management team. Instead, they support the existing team, strengthen governance, and provide strategic guidance. The founder’s transition is gradual and respectful.
Search fund. Acquisitions are typically financed with significant debt (similar to LBOs), which creates financial leverage and risk.
Family office. Acquisitions are typically financed with equity, with minimal or no debt.
Consider a search fund if: you want to sell 100% and exit completely, your company is small (EBITDA under 1 million euros), you are comfortable with a young CEO taking the helm immediately, and you prioritise speed of transaction over long-term relationship.
Consider a family office if: you want a gradual transition, you value the continuity of your team and culture, you prefer a partner with proven operational experience, you want flexibility in the deal structure (partial sale, minority stake, gradual exit), and you prioritise the long-term welfare of the company over transaction speed.
Both search funds and family offices serve legitimate purposes in the M&A ecosystem. The right choice depends on the size and complexity of the company, the owner’s objectives, and the type of relationship they want with the investor. The most important thing is to understand the differences clearly before committing — because the choice of investor shapes the company’s future for years to come.
Founder of Blue Mountain
Over 15 years investing in Spanish companies with patient capital. Expert in business succession, corporate governance, and middle-market investment.
By Blue Mountain Capital
By Dirk Manuel Martens Jiménez
By Dirk Manuel Martens Jiménez
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