There are a number of secular trends that may help explain this:

1. LMM PE funds aggressively going down market into traditional searcher EBITDA ranges. Searchers can't compete against committed capital buyers. Also, traditional search fund investors often have higher return expectations than LMM PE funds. 2. The most talented searchers increasingly go with the self-funded model due to its superior economics and the ability to retain control. With the self-funded ecosystem improving, even larger deals are now doable on a self-funded basis by going with non-traditional capital sources. 3. Technology is leveling the playing field. Historically, searchers were able to find deals by cold emailing/calling. This involved a lot of legwork and tedious tasks often performed by unpaid interns. Now, with good databases and marketing automation the effort to reach companies has come way down. Anyone you can buy a Zoominfo subscription or hire firms like Captarget. The result is that founder owned companies get inundated by all types of market participants who want to buy their company. 4. Owners are generally getting smarter and more aware of their options because of to 1. and 3. above. Finding unicorn deals where an owner is willing to sell a good company at a below market multiple to a buyer with no committed capital is becoming rarer.

Simplified - available capital. If you own a company, do you want to sell to John Q Public with every possible financing contingency, no money and no experience or 800 Gorilla PEG with their 9th fund and billions of AUM? Not to disparage or make it seem impossible, but have a plan on financing up front.

Also, guess what, most of those PEGs want asset sales. If you are able to find a work around or are willing to roll the dice to buy an S-Corp with a stock sale that has had a build-up so that they realize virtually no tax consequences of the sale then you will win the deal. Think outside the box, strike the deal that the institutional investors cannot strike.

It's all about differentiation and presenting the deal correctly. Alternatively, get financial partners in advance.

Middle market private equity uses small deals as quick add-ons for the now common buy and build model. They start with a large platform then the 1 mm EBITDA companies are snapped up to show deployment of capital and growth of the platform.

Search funds are also competing against independent sponsors (a more flexible model) on LMM deals.

unless you have bought a company or sweated a payroll the odds are against newbe search funds. Every deal has has black holes and unanswerable questions that freak out educated book smart investors.You need nerves of steel.