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In case you missed out on our last episode, please find it here.

Today’s Rundown

• How search fund investors are really faring

• Deep dive on AI rollups

• DD on search fund investors

• 3 deal / launch announcements

• 4 new career opportunities

Database Overview

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Weekly Highlights

• Yale published a paper on how search fund investors are really faring:

  • Across 1,192 investor observations from 23 funds, the weighted average portfolio MOIC was 2.5x, compared to 4.5x in Stanford’s entrepreneur-reported study

  • No investors in the sample matched or exceeded Stanford-level returns

  • Distribution is heavily skewed: 

    • Of 768 completed deals, 58% produced ≤1.99x MOIC, and only 2% exceeded 10x (“griffins”)

    • Mean MOIC was 2.78x versus a median of 1.6x, showing dependence on rare outliers

  • Portfolios missing 10x+ deals saw dramatic drops in total value - removing these events reduced portfolio MOICs by up to 20% 

  • Only 5 of 23 funds captured a “griffin,” and these top-tier investors outperformed across all return bins

  • More bets don’t guarantee better outcomes as regression analysis found no statistically significant link between deal count and portfolio MOIC (p=0.52), suggesting diversification alone doesn’t ensure exposure to top performers

  • Bottom line: Search fund investing is challenging; while the average outcome (2–3x MOIC) remains attractive (≈15–25% IRR over five years), returns are highly uneven, access-driven, and dominated by a few exceptional wins rather than consistent base hits

• s16vc published a comprehensive podcast episode on AI rollups:

  • AI roll-ups are about arbitraging adoption and CAC by buying fragmented, operationally heavy services businesses such as real estate, accounting, staffing, or BPO, embedding AI into text and voice-heavy workflows, and treating acquisition price as bulk CAC - faster, cheaper, and more durable than selling new software into sticky, low-churn markets

  • The margin story is secondary to time saved and growth since the key metric is time saved per workflow per FTE

  • Automation expands capacity and improves service quality, which drives structural margin uplift and eventually enables organic growth on top of an inorganic roll-up base

  • Markets become AI roll-up-able when certain conditions hold such as recurring, high-margin, low-concentration revenue, contracts held at the company level, and repeatable workflows in moderately fragmented sectors

  • Industries with non-automatable cost bases or extreme fragmentation are poor candidates because acquisitions there add limited efficiency

  • Building rather than buying technology defines defensibility as successful AI roll-ups operate like product-first companies that use M&A as their go-to-market motion, developing proprietary workflow automation and data products while using third-party tools only for non-core needs

  • Off-the-shelf AI integrations do not create lasting advantage

  • Capital structure discipline drives VC-style outcomes because early phases rely on equity to absorb technology and integration risk, with modest leverage introduced once the platform is cash generative and integrations are repeatable

• Chris von Wedemeyer, founder of search fund investor Legacy Partners, shared his approach on how to diligence search fund investors:

  • Not all capital is equal so choose investors who will shape your next decade since they become your board, mentors, and operating partners

  • Optimize for alignment and experience rather than simply the fastest or largest checks, because mismatched capital locks in friction for years

  • Investors who have lived through LOI turbulence, lender resets, and year-two cash squeezes are invaluable

  • Build around a few experienced anchors with real follow-on capacity and a small group of hands-on, value-add backers

  • Saying no is a skill so walk away from misaligned money when incentives or time horizons clash; a disciplined “no” today often protects returns tomorrow

  • The right investors accelerate decisions and expand your options; the wrong ones create pressure to exit early or pursue deals outside your strike zone.

  • Capital dynamics matter so verify who can truly fund the deal by confirming follow-on capacity, participation rates, and track record; some investors write small search checks for optionality but rarely follow through at acquisition; ask for proof of recent commitments and ensure equity gaps won’t derail closing

Deal / Launch Announcements

• 🇬🇧 Eyal Kaplan, a NCA-backed searcher, has acquired Paul Mathew Transport, a logistics and warehousing firm (link)

• 🇵🇱 Lynx Trail Capital, a search fund managed by Michał Łukasz Kamiński and Constantin Marek, has acquired ICEA, a digital marketing agency (link)

• 🇮🇹 Federico Verderi and Elvio Emanuele Rossini launched B2R Italian Investments, a sector-agnostic search fund (link)

Career Opportunities

• [PE-Asset] Investment & Business Transformation Consultant | PER | Hamburg (apply)*

• [PE-Asset] Intern Strategy Consulting & Value Creation | Flex Capital | Berlin (apply)

• [PE] Investment Intern | Astorg | Frankfurt (apply)

• [PE] Investment Intern | Partners Group | Zug (apply)

_*Headhunter

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