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Today’s Rundown

• J-curve in search fund acquisitions

• Top reasons why deals fail after LOI

• Insights of 60+ search fund investments

• 4 deal / launch announcements

• 9 new career opportunities

Weekly Highlights

• Judd Goodrich, an experienced SMB investor and entrepreneur shared his insights on J-curves in search funds:

  • There are many different ways a J-curve can hit acquirers when buying a business

  • Turnover – Employee departures create costly gaps before replacements are trained

  • Replacing seller – One owner often does the work of 2–3 employees

  • Capex – Unexpected big repair/replacement costs hit hard

  • Tech upgrades – Efficiency tools cost upfront before paying off

  • Customer churn – Some clients leave after leadership change

  • Learning curve – Daily operations reveal hidden complexities

  • Lost knowledge – Seller’s expertise disappears with their exit

  • Seasonality – Mistimed hiring/firing causes major losses

  • Overconfidence – Buyers often overrate their ability to add value

  • System changes – Breaking old but functional processes disrupts operations

• Novaston Capital Advisors, a search fund investor and accelerator, published a post on the top reasons why deals fall through after a LOI:

  • 63% - Discovery during due diligence

  • 48% - Valuation disagreements

  • 38% - Seller retraction

  • 32% - Competitive bidding

  • 27% - Investor support

• HoldCo Builders Podcast published a new episode with Tim Ludwig on his 60+ search fund investments:

  • Tim Ludvig focuses on $1–2M EBITDA businesses, often purchased at ~4× EBITDA multiples

  • Traditional searches fund ~$125k/year in searcher salaries, while self-funded searches can leverage SBA loans covering 80–90% of purchase price (but with personal guarantees)

  • In traditional searches, CEOs typically earn 25–30% ownership after vesting, while self-funded searches offer higher ownership with higher personal risk

  • Majority search’s model ties 100% of CEO equity to EBITDA growth over 5 years - large upside for outperformance, minimal equity if underperformance

  • A common case: buying at 4× EBITDA with 50% debt, paying debt down over 5 years doubles equity, while doubling EBITDA doubles it again - yielding ~4× equity without multiple expansion; if multiples expand (e.g., 4× to 6×), returns compound further

  • Margins may dip in year 1 due to investment in sales hires, systems, and reporting; growth typically accelerates thereafter

  • First 100 days are about stability - making payroll, listening, and implementing basics like KPI dashboards and clean sales pipelines

  • Best businesses show recurring revenue, ≥50% gross margins, low capex, low customer concentration, and simple operations

  • Success for first-time CEOs correlates more with EQ - tenacity, communication, and judgment - than industry expertise

Deal / Launch Announcements

• 🇵🇱 Cedo Capital, a search fund managed by Monika Wincel, acquired Rolfroz, a processor of vegetables (link)

• 🇪🇸 Acacia Capital, a search fund managed by Gonzalo Mallo Diez, acquired Lets Health, a provider of multichannel marketing and communication for the healthcare industry (link)

• 🇮🇹 Briano Castelli, Juan Pablo Meneses and Peter Kelly launched Albatross Partners, a search fund focused on B2B businesses (link)

• 🇪🇸 JB46 Partners, a fund of search funds, closed their third fund at €40m at its hard cap (link)

Career Opportunities

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

• [PE] Investment Manager / Director | PER | Nottingham (apply)*

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

• [PE] Investment Intern | FSN Capital Partners | Munich (apply)

• [PE] Investment Intern | FSN Capital Partners | Stockholm (apply)

• [PE] Investment Intern | FSN Capital Partners | Oslo (apply)

• [PE Asset] M&A Manager | AUCTUS | Dusseldorf (apply)

• [PE Asset] M&A Manager | Entro Service | Hamburg (apply)

• [PE Asset] Strategy Associate (CFO Office) | PER | London (apply)*

_*Headhunter

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