I've been working in the search fund space for about a year now, and while I feel like I've grasped most of the concepts, there's one thing that still puzzles me: why do US/Canadian search funds generally have a higher average IRR compared to those in the Eurozone?

Here are a few thoughts I have on this, and I'd love to hear what others think:

Market Maturity and Competition: from what I've seen, the search fund market in the US and Canada seems to be more established and mature. This means there's a larger community of experienced investors and operators who understand the model well. Plus, the higher competition among private equity funds could be driving up acquisition multiples, which might play a role in the higher returns we see.

Economic Environment: the business landscape in the US and Canada tends to be more dynamic and conducive to growth. There are larger markets, better access to capital, and more robust support networks for entrepreneurs. All these factors can contribute to better performance of acquired companies, and thus, higher IRRs.

Exit Opportunities: higher competition might drive up acquisition prices, but it also suggests a healthy market for exits. There seem to be more opportunities for lucrative exits in the US and Canada, which can significantly boost the IRR.

Operational Efficiency: businesses in the US and Canada often benefit from more advanced operational practices and innovation. This can lead to more efficient scaling and improved profitability after the acquisition, enhancing returns.

Investor Networks: investors in the US and Canada generally have more experience with search funds and better-established networks. This means they can offer more strategic guidance and support, which can make a big difference in the success of the fund.

These are just my observations, and I'm sure there are other factors at play. I'd be really interested to hear from others with more experience or different perspectives on why the IRR difference exists. What do you all think?