The 2020 Stanford Search Fund Study reports a 33% failure (to complete a transaction) rate. And, of those search funds that bought a business, 25% suffered losses from their investment.
Self-funders, in contrast, quit or fail to buy more often than search funders, according to my observations and interactions with brokers and advisors.
• You have to wonder why so many people begin something destined to fail, don’t you?
Perhaps the better success rate of search funds pertains to the quality of the investors, providing oversight, and sufficient capital to assure positive cash flow.
You can increase the probability of doing a deal if you know more about how to handle the kind of due diligence that occurs before LOIs. You're invited to attend my small group Oct. 6 Zoom Q&A: How Pre-LOI Due Diligence Can Crater Deals. It's on the Searchfunder.com calendar but please use this link now if you want to attend, and be able to submit questions prior to it. https://us02web.zoom.us/meeting/register/tZIpcu-urTwqGdPWOEZLBC1K8KXPTikQal3d