Acquisition has become the easier part: Search fund acquisition rates are high: roughly 60% of U.S. and Canadian search funds since 2014 have bought a company, and internationally the figure is even stronger — nearly 80% in concluded searches.

That should excite you, but also worry you.

If most people can buy something, acquisition is no longer the filter. The real question is whether you can run the company you buy.

Operating is where gravity hits: The median search fund acquisition today is about $14–15M purchase price funded through debt and equity, with 25–35 employees and >20% margins. These are small businesses. They come with customers, contracts, processes (or lack of them), and a P&L that will expose your blind spots in the very first month. And remember: these acquisitions tend to be levered with 2-3x debt, magnifying any operating mishaps.

Its also often not the large board level capital allocation decisions that build and grow these businesses, but the small daily 80/20 decisions that build up momentum, culture and resilience over time.

Before you raise: get real operating reps: Your pre-search phase shouldn’t look like a personal branding tour. It should feel like training camp. From personal experience, starting my career in investment banking and PE hardwired me for high-performing, intrinsically motivated workplaces. I used to think that monetary incentives alone drive good outcomes. Becoming the CEO of a small company brought me back to reality. For a large part of the workforce, being compensated fairly was important, but being heard, working toward a well-articulated vision, and workplace culture were equally important. It was a jump into cold water, and I had to unlearn a lot.

If possible, get operating repetitions outside of your area of expertise:

Many employers will support you in doing “mini-internships” in different departments. Use this opportunity.

These experiences don’t live on a résumé, but they’re exactly what running a small business feels like.

Pick a team that will sit with you in the ugly weeks: Not every investor is built for the operating reality of ETA. Choose partners who:

Before closing, write down three needles you can reliably move in your first 180 days. Make sure your investors understand and support those moves.

Protect your decade: There are plenty of companies you can buy. There are far fewer you can compound for a decade. Pay only what cash flow can carry through a bad quarter.  Listen before you change and run the business you inherit before dreaming about the one you want.

The opportunity cost is enormous. And the meter never stops. If you want guidance through ETA - Legacy Partners has worked across the ETA ecosystem for years, advising searchers, operators, and investors through acquisition, diligence, and operating transitions. Feel free to reach out! We’re happy to help.

Franz Purucker warns that while succession and tech-lagged SMBs create a real ETA opportunity, failure rates may be drifting toward 60-70% as ambitious roll-ups, rising multiples, and non-operator talent enter the game. Multiple-arbitrage strategies often run into operational chaos when owners paste together small companies with different cultures, contracts, and systems.

Pharus Succession - PT

Pharus Succession, founded by Rafael Herrmann de Castro Camargo, is looking to identify, acquire, and manage a successful Iberian company, with a primary focus on Portugal. The fund is targeting a well-established SME with resilient cash flows, succession needs, and an owner-operator seeking a values-aligned partner to preserve culture, people, and long-term continuity.

Dave Gilbert explains how he bought Proven CFO for $2.8M, only to discover post-close that true EBITDA was roughly half of the advertised due to shaky add-backs, family salaries, and client concentration that cost the firm ~$500K in churn. He walks through painful restructuring, cultural resistance inside an accounting-heavy team, and how the experience reshaped his view of what “risk” really looks like in small business deals.

👉 Was this email forwarded to you? Subscribe here to get ETA Europe delivered to your inbox every Thursday 👈