SFA was created with one simple goal in mind: dramatically improve a searcher’s odds of success in buying a company, running it as CEO, and earning meaningful financial rewards. Since its inception in 2015, SFA has redefined search.
All prospective searchers know that search funds have delivered phenomenal aggregate returns over the past 20 years:
But these are investor returns, not searcher returns. Searchers face a much different reality.
The stats don’t lie!
100% of searchers believe they will succeed, but well over 50% of searchers will fail.
Most searchers have been highly successful at their undergraduate school, in their early professional lives, and during their studies in a top MBA program. This history of success leads them to ignore the statistics. They tend to assume that the success will continue, including their search for a company to buy and run. Unfortunately, this reasoning is wrong.
27% of searchers will fail to acquire a company.
Searchers run out of time. They lose time reinventing the wheel as they learn to search on their own. They lose time pursuing flawed companies. They lose time when good deals fail to close. At each step of their search, they face new learning curves, which significany compound the risk of failure.
28% of searchers will earn zero financial reward for themselves, even after buying a business.
Searchers buy businesses they should never have bought. Why? Because many searchers succumb to the problems associated with inadequate due diligence, confirmation bias and anxiety. They also lack sufficient investor involvement at the time of acquisition. Then, as new CEOs, they lack the engagement of truly committed and supportive board members and investors who know their strengths and weaknesses. This creates new problems or compounds pre-existing ones at pivotal junctures in the CEO's tenure.
Stanford Graduate School of Business research shows that only 30% of all searchers earn significant financial rewards.
Searchers are highly trained and extremely talented people and choose to forgo very interesting career opportunities to pursue entrepreneurship through acquisition. As a result, searchers face considerable opportunity costs. Therefore, they should expect to reap substantial financial rewards after buying and running a business. Research shows that the vast majority do not.
That means 70% of searchers earn little or nothing at all.
This is a harsh reality that many prospective searchers fail to acknowledge even though they’ve read the studies and claim to heed the warnings. The psychological term for this is illusory superiority: believing that you will beat the odds and that “others” will fail.
Search Fund Accelerator has reinvented search. We exist to help searchers succeed and have explicitly aligned our incentives to ensure SFA and our entrepreneurs mutually benefit from investing in great businesses over the long-term.