Pre-acquisition expenses in self funded search?

November 07, 2025

by a searcher from Georgetown University - The McDonough School of Business in Washington, DC, USA

Have you ever seen a scenario in a self-funded search where the main challenge is not having personal capital to cover the initial $50–100K in pre-acquisition expenses (diligence, legal, etc.), and investors step in to provide that early capital — with the option to invest in the deal once it closes (similar to a traditional search setup)? Unfortunately, I don’t have the funds right now to cover that personally.

0 Likes

7 Replies

124 Views

Replies

Reply by a searcher
from Columbia University in Fairfax, VA, USA

As ^redacted‌ mentioned, raising a 'family & friends' round is going to be your best bet (where you'll likely have more flexibility on terms). The vast majority of investors in the space are going to want to see you personally contribute capital into the deal - you didn't mentioned that part, but I'm assuming that if the pre-acquisition costs are a constraint for you, that element is too. And have you already sourced a business you're under (or about to go under) LOI? If not, then you're effectively gearing up for a Traditional Search model, where you'll pre-sell units to investors to fund your Search Phase (sourcing, diligence, etc), get a ROFR (alongside other terms - i.e., Step-Up), and will contribute the acquisition capital if they choose to participate at that point.

Reply by a professional
from Liberty University in Fort Myers, Florida, United States

50-100k in DD costs is very high. You may have some fees at closing (like the SBA guarantee fee), but those typically get rolled into the loan. If cash is that tight for a searcher that they cannot pay for the DD fees, the bank will likely have a hard time approving the individual for the loan too.

+5 more replies.

Join the discussion