Sourcing and Evaluating Acquisition Targets: Practical Insights for Search Fund Entrepreneurs

For search fund entrepreneurs, acquiring a business is both thrilling and uncertain. Unlike private equity firms seeking portfolio growth or strategic buyers expanding platforms, you're looking for a single, life-changing acquisition—one company to own, operate, and grow.

This distinction shapes every step of sourcing and evaluation. It's not just about identifying profitability. It's about finding a company whose culture and legacy align with your leadership vision.

Start With Clarity

The process begins with defining the type of business you want to lead and the community you want to serve. This clarity becomes your north star, helping you efficiently sort through opportunities.

Key questions to answer:

• What industries align with my skills and interests?
• What size business am I prepared to manage from day one?
• What kind of culture do I want to inherit and sustain?

Searchers who start with focus move efficiently and connect authentically with sellers. You're not just looking for a deal. You're looking for a business to steward.

Build a Proactive Sourcing Engine

Early deal flow often feels reactive as you're responding to brokers, scanning listings, waiting for introductions. A proactive sourcing engine changes that dynamic.

Strong sourcing combines direct outreach with trusted intermediary relationships. Bankers, brokers, attorneys, and wealth advisors all help identify owners open to selling. Balance personal connection with professional networks. The right introduction opens doors cold outreach can't.

Your sourcing engine should include:

• Direct outreach: Personalized messages to owners explaining who you are and why legacy matters
• Broker relationships: Clear communication with intermediaries specializing in your target sectors
• Advisory connections: Accountants and attorneys who regularly advise on succession planning

Build this combination intentionally to create a steady pipeline grounded in trust and mutual fit.

Evaluate Fit Beyond Financials

While financial performance is essential, numbers alone don't tell the full story. You're stepping into leadership, not integrating into an existing operation. Cultural and relational fit become your most important evaluation criteria.

Look for alignment in three areas:

• Values and mission: Does the company's purpose resonate with your philosophy?
• People and relationships: How do stakeholders describe their connection to the business?
• Transition readiness: Is the seller prepared to let go? Will key employees stay?

Search fund acquisitions hinge on relationships. When sellers trust their company's culture will endure under your leadership, negotiations smooth, transitions become natural, and success becomes attainable.

Balance Brokers and Proprietary Opportunities

Both brokered and proprietary deals play vital roles. Don't choose one path—create a balanced system leveraging both.

Brokers bring structure, documentation, and credibility while filtering quality opportunities. Proprietary outreach uncovers owners who haven't decided to sell, offering more time for relationship building and creative structures.

Together, they expand your reach without compromising focus.

Turn Diligence Into Insight

Once an opportunity emerges, diligence becomes your decision-making tool. For first-time acquirers, it can feel overwhelming... but it shouldn't.

Three critical areas:

• Financial diligence: Validates revenue, margins, and cash flow trends
• Operational diligence: Confirms the business can sustain leadership transition
• Tax diligence: Evaluates structural and compliance health

Done right, diligence provides insight into daily operations. It helps you understand what's needed to step in confidently, maintain continuity, and improve performance from day one.

Lead Through Transition

Acquiring through a search fund is about people as much as performance. Owners aren't just selling a business—they're entrusting its future.

Your success depends on managing this transition. The first months set the tone for everything that follows. Demonstrate humility, listen actively, respect what works. Build credibility by learning before changing.

Financial metrics follow when cultural trust is established.

Partner With the Right Advisory Team

The complexity of buying and running a business doesn't have to feel overwhelming. A strong advisory partner brings perspective, clarity, and confidence to every stage.

At Redpath, we work alongside search fund entrepreneurs from deal sourcing through closing and beyond. We help you:

• Evaluate financial, operational, and tax realities with precision
• Understand deal structure implications before signing LOIs
• Communicate clearly with investors, lenders, and sellers
• Step into ownership with clean books and confidence in your first 100 days

Our model ensures you always have a dedicated client manager backed by specialists. We respond quickly, think proactively, and keep the process grounded in clarity.

The Bottom Line

Finding the right acquisition is all about alignment. For search fund entrepreneurs, success comes from discipline, empathy, and understanding what you're stepping into.

Combine proactive sourcing with rigorous evaluation and the right advisory support, and the process becomes less about searching and more about building the foundation for long-term success.

Learn more about Redpath's Entrepreneurship Through Acquisition Services. Contact us today to start a conversation.