The Wealth Potential of Self-Funded Search

Yesterday SIG published their study on self-funded search, and I interviewed partners redacted‌ and redacted‌ to learn the key findings. (Interview embedded below.)

The report is intended as an answer to the Stanford Study on the traditional search fund side.

Some much-needed visibility into self-funded search — which is most searchers after all.

Fascinating data.

A few favorite findings:

53% of searchers reported net equity proceeds of over $1m.

Meaning:

Over half of searchers who actually acquired made over a million dollars by buying a business.*

More impressive, 24% reported net equity proceeds of $4m or more.

So a quarter of self-funded searchers who bought a business estimate the value of their equity in their businesses to be $4m or more.

Wow.

AND, most respondents had acquired within the last 3 years...

Which is to say:

In most cases, that's $4m in 3 years or less!

Assuming the searcher's business grows and/or that the searcher's position continues to grow as debt is paid down, the $4m will only grow too.

A couple more:

* 68% contributed less than $200k of their own capital to fund the acquisition.

* 24% contributed less than $50k!

There is so much more data in this study, a lot of which we discuss in the interview. Enjoy:

* Assuming they sell; this net equity number was based on valuations at reasonable multiples.