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Today’s Rundown

• Search funds in the UK

• Rethinking traditional approaches to ETA

• How to build a 350m holdco

• Avoiding fatal flaws in ETA deals

• 1 deal / launch announcement

• 7 new career opportunities

Database Overview

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Weekly Highlights

• Chris St Cartmail, an experienced M&A advisor, shared an update of search funds in the UK:

  • Search funds have delivered strong historical returns with a 35.3% mean IRR and a 5.2x ROI since 1986, with recent analysis showing ~25% net IRR, outperforming private equity and venture capital

  • Despite this, more than 50% of search funds fail: 37% never acquire a business, 19% fail to generate ROI, and 5% lose all equity

  • Three main failure modes dominate: the “No-Dealer” (no acquisition within ~2 years), the “Imploder” (deal closed but value quickly collapses), and the “Drifter” (stagnant businesses held too long, causing the worst outcomes)

  • Sellers generally view genuine searchers as reasonable buyers, though transactions are slower, funding structures more complex, and due diligence often lighter compared to strategic acquirers

  • Successful transactions usually involve micro and small-cap companies led by ageing owners, where genuine searchers with validated backing can achieve solid long-term outcomes

• Peter Hajdu, Managing Partner at next-generation MBI platform All Interests Aligned, on rethinking traditional approaches to ETA:

  • AIA’s mission is to tackle Europe’s SME succession crisis head-on by injecting new leadership and sustainable value creation, with a 2030 vision of dozens of revitalized companies and thousands of jobs preserved

  • AIA’s platform is designed to overcome the gaps in traditional search funds by providing committed capital, seasoned operators, and full alignment so that investors, operating partners, management, and employees all win together, supported by centralized M&A and governance expertise

  • It targets SMEs valued at €15–40 million in essential sectors, focusing on simple businesses that are often overlooked by private equity but have significant upside from professionalization

  • Operating partners are seasoned executives with 15–25 years of leadership experience who can establish KPIs, processes, and incentives, while adapting to volatility; they receive strategic, operational, and emotional support from AIA without being micromanaged

  • Value creation relies heavily on introducing modest digital tools such as CRM, e-commerce, or digital service layers, which deliver outsized impact in low-tech industries and form part of AIA’s ambition to build a repeatable engine that pairs top talent with succession opportunities

• HoldCo Builders Podcast published a new episode with Jack McCarthy on how to build a 350m holdco:

  • Jack McCarthy co-founded Goldley Farming in 2017 and has since raised over $250 million of equity, building a specialty crop platform with nearly 12,000 acres of almonds, pistachios, and dates, making it one of the largest players in the U.S. specialty farming sector

  • The company grew from $2 million invested in its first year to $250 million by 2023, transitioning from deal-by-deal farm purchases to a single integrated operating model with about 60 employees and long-term aligned investors

  • Goldley operates with a private equity mindset but focuses on long-term ownership of high-quality farms with strong water and growing conditions, having reviewed ~1,400 farms but acquired only 27 (a ~2–3% hit rate)

  • California’s unique Mediterranean climate and water system supports 80% of the world’s almonds and 50% of its pistachios, underpinning Goldley’s thesis of long-run constrained supply, resilient demand, and attractive returns

  • The business emphasizes operational excellence, low leverage, and alignment with its broad LP base and employees, while maintaining a culture built on ownership, candor, family-first values, and long-term stewardship of resources

• Sam Rosati & Grant Hensel, two experienced SMB investors, shared their insights on avoiding the 4 fatal flaws seen across hundreds of ETA deals:

  • Avoid high customer concentration, since losing a 20%+ customer can trigger layoffs and debt service coverage issues, and do not pursue deals where losing the top one or two customers could render the business insolvent

  • Favor low CapEx and low working-capital intensity, because EBITDA can disappear into equipment replacement and inventory or receivables needs, and large purchase orders frequently demand upfront cash that pressures profitability

  • Prioritize low cyclicality and non-discretionary demand, since an SBA 7(a) loan runs 10 years and you should assume at least one recession in which break-fix revenue is likelier to hold than big-ticket replacements

  • Seek long histories of stable profitability, ideally 20+ years including shocks like 2008, and be wary of young boom-driven firms

Deal / Launch Announcements

• 🇩🇪 Jan Koch and Marco Xie-Bo launched NXT.era Ventures, a fund of search funds (link)

Career Opportunities

• [ETA - Job of the Week] Investment Associate | Tembo Search Partners | Frankfurt / Hamburg (apply)

• [PE Asset] Senior M&A Manager | green flexibility | Remote (apply)

• [PE Asset] (Senior) M&A Manager | Altano Group | Germany (apply)

• [PE Asset] M&A Manager | Tim Wagner Personalberatung | Frankfurt (apply)*

• [PE] Junior Investment Professional | PER | London (apply)*

• [PE] Investment Associate | PER | London (apply)*

• [PE] Investment Analyst | Systematic Growth | Hamburg (apply)

_*Headhunter

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