The Atlantic Divide: How European Search Funds Carve Their Own Path

European search funds have emerged as a powerful force in entrepreneurship through acquisition (ETA), but they're not simply carbon copies of their American counterparts. The differences go well beyond geography, creating both challenges and opportunities for entrepreneurs looking to acquire businesses across the pond.

## Structure

The search phase itself follows similar contours on both continents—entrepreneurs typically raise €300,000-700,000 in search capital—but even here, Europeans have experimented with terms. While the standard 50% step-up on search capital remains largely intact, some European searchers have pushed for this premium to apply only to capital actually spent rather than the full commitment. Investors have generally held firm, arguing that since all committed funds are at risk, the full step-up is justified.

## The Education Gap: Selling the Model and Yourself

In the U.S., search funds enjoy a 40-year history with a well-established ecosystem of investors like Pacific Lake and dozens of serial backers who know the playbook by heart. European searchers face a steeper climb:

• Many potential European investors have never encountered a search fund before

• Searchers must simultaneously pitch themselves AND educate investors about the model

• European PPMs prominently cite Stanford's impressive 35% IRR figures, even though international returns still have a shorter track record

• The U.K. has seen many more self-funded searchers partly because raising traditional search capital is harder

This investor education requirement creates an additional burden. While American searchers can tap into a dozen or more experienced investors, their European counterparts often build networks from scratch, mixing a few international search fund investors with local high-net-worth individuals who need convincing.

## Cultural Dynamics and Market Realities

Beyond mechanics, the entrepreneurial landscape differs dramatically. European searchers tend to be older (early 30s to mid-30s versus fresh MBA graduates in the U.S.) and more experienced—a necessity when convincing skeptical European business owners to hand over their life's work to a relative outsider.

Market dynamics create another stark contrast. As one European investor observed, American businesses can scale "without going abroad," whereas European companies can hit national borders.

The competition landscape offers a silver lining, however. While American searchers face a crowded field of fellow ETA enthusiasts and private equity firms all chasing the same deals, a retiring owner in Italy or Belgium may have never heard of a search fund and isn't fielding multiple offers. 

## Bridging the Gap

Despite these differences, successful search funds on both sides of the Atlantic share the same DNA. The model works globally, even if the tactics differ. European search fund activity is now leading global growth—something unimaginable a decade ago.

For entrepreneurs considering the European search path, understanding these distinctions is crucial. The most successful European searchers tap into both worlds: leveraging the proven Stanford blueprint while adapting to local nuances. This might mean raising capital from both global and local investors and being prepared to educate stakeholders about this "new" entrepreneurial path.

The Atlantic may be wide, but the bridge between these two search fund ecosystems grows stronger every year.