Self-funded searcher under LOI: do traditional search terms still make sense?

January 30, 2026

by a searcher from IESE Business School in Barcelona, España

Curious to get the community’s take and hear real experiences. When a self-funded searcher is already under LOI and progressing through diligence, but still has no acquisition capital commitments, does it still make sense to follow the traditional search fund investor model and standard terms? In that situation, it feels like there may be room to find a better-fit partner (and potentially better economics for the searcher) by going outside the classic search investor pool—strategics, operators, industry-focused HNW/family offices, or independent sponsor-style capital. Would love to learn from anyone who’s been in this exact spot: what route you chose, what terms you ended up with, and what trade-offs showed up in practice.

Reply by an intermediary
in Austin, TX, USA

Never comingle traditional search and self funded search in any area of the deal: terms, investors, deal structure, etc. They are not the same and you will regret having traditional search investors involved in a self funded deal. We reverse engineer the answer you are looking for. Start with an attractive exit MOIC to the investors and calculate what% ownership gives them that MOIC for the $ they invest. Don't forget to include the effects of paying off debt. You can search Searchfunder for a model of this. I am sure someone has already addressed this issue.

Reply by an investor
from Columbia University in Fairfax, VA, USA

Hey ^redacted‌ - we used a standard Participating Preferred structure for our Self-funded Search deal, but used the Project Cost Method to calculate ownership split with investors. It's a structure that only really works for Self-funded deals (won't fly for Traditional Search). Happy to share the details if you'd like.

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