Search fund timeline: from the decision to search to the day you close

The whole path on one page

The table below is the path from the decision to the first day as owner. The durations come from the studies where one exists. Where none does, the column says so rather than guess. Each stage has its own guide or section later in this handbook.

Stage 1: decide the route and fund the search

Choose among a traditional search fund, a self-funded search and an independent sponsor route (see the first guide). A traditional searcher raises search capital. IESE's 2026 study of funds outside the U.S. and Canada found a median of six months to raise, with a median of 15 investors and about $502,000 of capital. A self-funded searcher instead budgets personal runway and confirms early what an SBA lender will finance.

At the end of this stage you should be able to answer three questions in one sentence each: how long you can search, what you will earn while you do, and what happens if you find nothing. If you cannot answer the third, you have not finished stage 1.

• Traditional route deliverables: signed investor documents, a budget, a reporting schedule.
• Self-funded route deliverables: a personal budget for 12 to 24 months, a list of lenders and brokers who finance deals in your size range, and your target equity amount (SBA minimum is 10 percent of total project costs for an initial acquisition).
• Sponsor route deliverables: a track record summary, a list of capital partners and a term sheet template.

Stage 2: write the search criteria

Criteria turn a vague wish into a screen. Write them down before you source, and revise them in writing when you learn something. A good test: can a stranger apply your criteria to a one-paragraph company description and reach the same answer you would?

Stanford's 2026 article names services, software and education as the top target industries in 2024 and 2025, and IESE reports that investment criteria often include high-quality recurring revenue, high EBITDA margins and solid industry growth. Use that as context, not as a template: you need criteria you can explain from your own skills and the evidence in front of you.

Stage 3: source and reach out

Most searchers combine direct outreach to owners with brokers, marketplaces and lists. The sourcing guide covers every channel and includes ready-to-use templates for email, LinkedIn, brokers and follow-ups. The timeline point is that outreach starts the day your criteria are done, not the day your money arrives.

IESE's 2026 data shows why. Searchers who closed signed their first LOI by month six on average, and only 18 percent of them signed their first LOI after the first year. Searchers who did not close signed their first LOI by month eight, and 29 percent signed theirs after more than 12 months or never. The earlier you have real conversations, the earlier you learn what is for sale at what price.

Stage 4: screen, value and decide whether to bid

Screen on a first call, then on three years of financials. Normalize earnings, test the add-backs, and decide a price range before you write an offer. The evaluating and valuation guides show how, with a worked example that carries through this handbook.

• Screen call (20 to 30 minutes): ask about history, why they are thinking of selling, what the owner does each week, top customers, key employees and revenue trend. Do not discuss price first.
• Financial review: three years of tax returns and financial statements, plus year to date. Reconcile revenue to bank deposits.
• Decision rule: write down your maximum price before you see the seller's number. Compare it with the asking price and with what a lender will fund.
• Pass fast when the answer is no. A clear, courteous pass keeps the relationship and saves both of you time.

Stage 5: sign a letter of intent

The LOI sets price, structure, financing, diligence period and exclusivity. Treat the first LOI as the start of diligence, not as a closed deal. Searchers in IESE's data who closed averaged 4.6 signed LOIs, and the searchers who did not close averaged 8.2. The LOI guide includes a full skeleton you can adapt with your lawyer.

Stage 6: diligence and financing in parallel

Diligence and financing run at the same time, because a lender's findings change your price and your diligence findings change a lender's view. For an SBA 7(a) loan under SOP 50 10 8.1, the lender must obtain an independent business valuation from a qualified source, verify seller financials against IRS tax transcripts, and for an initial acquisition with a business purchase price of $3 million or more also obtain a Quality of Earnings report with a cash proof. Order the third-party reports early because they take weeks.

This stage is where most signed LOIs fail. IESE's reasons, from searchers with a combined 716 signed LOIs, were adverse diligence discoveries (59 percent), disagreements about valuation (41 percent), the seller retracting (32 percent) and lack of investor support (31 percent). You cannot remove these risks, but you can reduce them: verify the numbers before you sign the LOI, keep investors informed, and tell the seller early what a valuation or QoE might change.

• Week one of exclusivity: send the diligence request list, engage the lawyer and accountant, and open the lender or investor process.
• Weeks two to four: receive documents, hold management meetings, order the valuation and QoE, and negotiate the purchase agreement outline.
• Throughout: write a running list of findings with a dollar effect, and decide which change the price, which change the terms and which end the deal.

Stage 7: legal documents and closing

The purchase agreement turns the LOI into a contract. Alongside it you sign the seller note and any standby or subordination agreement, the non-compete, any consulting or transition agreement, lease assignment, lender loan documents and guaranties. SBA 7(a) lenders use SBA Form 148 (unconditional guaranty) for personal guaranties and SBA Form 155 or an equivalent for standby agreements. Collect required consents (landlord, key customers, licensors, lender) before the closing date.

A closing checklist helps. Keep a shared list of every document, signatory, owner and status, and review the funds-flow statement line by line with your lawyer before you sign.

• Final financials and bring-down of reps confirmed.
• Consents and estoppels received.
• Insurance bound in your name, effective at closing.
• Bank accounts, payroll and tax registrations ready for the change of ownership.
• Funds flow signed by buyer, seller and lender.
• Employee and customer announcement drafted and timed with the seller.

Stage 8: the first 100 days

The first 100 days are covered in detail in their own guide, with a day-by-day plan, a stakeholder checklist and an investor update template. The headline is the same one that experienced searchers repeat: learn before you change. Meet the team, protect the customers, get cash visibility, and agree an investor reporting rhythm.

A milestone checklist

Copy this into your own tracker and fill in dates as you go.

SEARCH MILESTONES
[ ] Route chosen (traditional / self-funded / sponsor): date ____
[ ] Search capital or personal runway confirmed: $____ for ____ months
[ ] Criteria written and reviewed by two advisors: date ____
[ ] Outreach list built (target ____ companies): date ____
[ ] First 25 outreach messages sent: date ____
[ ] First 10 owner calls held: date ____
[ ] First financials reviewed: date ____
[ ] Maximum price set before first offer: $____
[ ] First LOI signed: date ____  (IESE: successful searchers averaged first LOI by month six)
[ ] Diligence request list sent: date ____
[ ] Valuation / QoE engaged: date ____
[ ] Lender or investor commitment: date ____
[ ] Purchase agreement signed: date ____
[ ] Closing: date ____
[ ] Day 1 communication sent to team and customers: date ____
[ ] Day 30 / 60 / 100 reviews held: dates ____

When to stop or change course

Some searches end without a deal. Stanford's aggregate acquisition rate is 58 percent, and IESE reports 73 percent among concluded international funds, so many do close, but a meaningful share do not. Decide your stop rules at the start, with your investors if you have them. Examples: a date by which you will have signed your first LOI, a number of conversations that triggers a criteria review, and a cash threshold at which you tell investors the plan has changed.

Go or no-go gates

Decision gates stop you from sliding from one stage to the next without a choice. Write the gate criteria in advance and review them with an advisor or investor.

An illustrative 24-month plan

Use this as a starting calendar, adjusted to your market. The month ranges are planning assumptions, informed by the studies cited above (six months to raise, around 20 months to acquire, a first LOI by month six for successful searchers), not guarantees.

The 20-month figure is Stanford's reported timing for funds that acquire, and funds that do not acquire are not in that average. Plan the budget for 24 months so a normal delay does not force a rushed deal.

How to spend your time each week

A weekly allocation keeps the search balanced. These are suggested shares, not benchmarks:

• About half the week on outreach, calls and follow-ups, which feed the pipeline.
• About a quarter on analysis of live opportunities.
• About a tenth on learning an industry or the legal and financial basics.
• About a tenth on investor, advisor and lender relationships.
• The remainder on administration and review of the pipeline.