Grupo Santa Marta › Equity Gap
Equity Gap Specialists

When the Cap Table Doesn't Close

Search investors are not obligated to go to the acquisition — or to go at their original ticket size. When some don't show up, the equity gap appears. We've spent years closing that gap: committed capital, no fundraising, in weeks.

Talk this week
15–30 days
Typical window to close the gap
10–20% gap
Equity gap as a share of total acquisition equity
2–4 investors
Generally enough to close the gap
The Problem

What Is the Equity Gap in a Search Fund?

It's not a bank debt problem. It's a cap table problem: the total equity you need to close is greater than the equity your investors confirm at closing.

The cap table gap

Investors who participated in the search capital round have the option — not the obligation — to participate in the acquisition. And if they participate, they can do so at a lower ticket than their original. The gap appears when the sum of acquisition commitments is less than what's needed to close the deal.

It's not about the company

An equity gap does not mean the company is bad or the deal is poorly structured. Investors who don't show up have their own reasons — and those reasons rarely have anything to do with the quality of the target. The deal can be excellent and a gap can still appear.

Maximum pressure moment

The gap typically appears in the final weeks before signing. The seller is waiting. The bank has its credit approved. Advisers are positioned. All that remains is closing the gap. Time to find a trusted investor who can move fast is minimal.

The Causes

Why Investors Don't Go to the Acquisition

Being in the search cap table does not guarantee participation in the acquisition — nor at the same ticket. These are the most common reasons.

1

Conflict of interest — board member or investor in a competitor

The investor sits on the board — or holds a significant stake — in a company that competes with the acquisition target. Joining the acquired company's board would create a direct conflict with that prior position. This is a frequent but underappreciated cause: the investor wants to participate, but their fiduciary duties to the competing company make it impossible.

2

Sector or geographic overexposure

The investor already has a position in a company in the same sector or region. A family office with three participations in industrial companies in the Basque Country doesn't want to add a fourth. It's not a veto on the deal — it's a portfolio constraint the searcher cannot control.

3

Search fund allocation limit reached

Many investors have a maximum allocation to this asset class — a percentage of their total portfolio. If they've already hit that limit through the year's acquisitions, they can't write another cheque even if they want to. This is more common in family offices with structured investment policies.

4

Any other reason

Changed personal circumstances. Family office reorganisation. A new partner with different criteria. Unexpected capital commitments in other assets. The investor has no obligation to explain. And the searcher has no time to debate it: the closing is in weeks.

The Solution

What the Equity Gap Investor Must Be Able to Do

Not just any investor can close the equity gap. Entering in the final weeks of an acquisition requires three very specific capabilities.

Ultra-fast analysis

The deal is already structured. The new investor doesn't start from scratch — they arrive when the information memorandum, due diligence, and negotiation are already done. They only need to understand the company and the cap table in days. Anyone who can't do that cannot close the gap.

Committed capital

You can't close an equity gap with an investor who first needs to raise capital or go through a four-week investment committee. The capital must be available to sign. Full stop. This is the constraint that eliminates most candidates.

Knows the ecosystem

Entering a cap table of people who don't know you, in the final stretch of an acquisition, requires prior trust. If the new investor already has a relationship with the cap table investors, the searcher, and the advisers, the process is smooth. If not, it's very hard to get the team to open the door at the last minute.

Why Grupo Santa Marta

Capital. Speed. Network.

The equity gap is our terrain. It's not something we do occasionally — it's one of the core reasons we exist. We've spent years working alongside the key investors in the Spanish search fund ecosystem: we know them, they know us, and when there's an equity gap to close, the trust is already built.

When someone calls us with a gap — sometimes weeks, sometimes days before closing — we can analyse fast because the deal is already done. We just need to understand the company and the cap table. And because our capital is permanent and already committed, we don't depend on fundraising to write the cheque.

And when the gap is larger than a single cheque can cover, we don't stop there. We bring in the co-investors we already work with closely — people who know our process, trust our diligence, and can move at the same speed. One call can close a gap that would take anyone else weeks to assemble.

  • Permanent committed capital — no fundraising needed
  • Co-investor network ready to act alongside us
  • We know most of the key SF investors in Spain
  • Analysis in days, not months
  • No fund clock — long-term investment horizon
  • Active board presence post-closing
Talk about the equity gap
Frequently Asked Questions

Frequently Asked Questions

What exactly is the equity gap in a search fund?
The equity gap is the difference between the total equity needed to close the acquisition and the equity that cap table investors actually confirm at closing. Search capital investors have the option — not the obligation — to participate in the acquisition, and not necessarily at the same ticket. When some don't show up or reduce their commitment, the gap appears.
Why don't search investors go to the acquisition if they already invested in the search?
Multiple structural reasons: they sit on the board (or hold a significant stake) in a company that competes with the target — creating a fiduciary conflict of interest — they're overexposed to that sector or geography, they've hit their allocation limits to this asset class, or their circumstances have changed. Being in the search cap table does not obligate them to participate in the acquisition — nor at the same ticket size.
When does the equity gap appear?
Typically in the final weeks before closing, when cap table investors confirm their definitive participation in the acquisition. Sometimes it appears days before signing. The deal is already structured — all that remains is closing the capital gap.
Can existing investors cover the equity gap?
Sometimes. Investors who are going to the acquisition can increase their ticket to cover the gap — but they don't always have the capacity or the willingness. When they can't, a trusted new investor who can move fast is needed.
What does an investor need to be able to close the equity gap?
Three things: (1) fast analysis capacity — the deal is already done, you just need to understand the company and cap table in days; (2) committed capital — no fundraising needed; (3) knowing the ecosystem — prior trust with cap table investors makes it possible to enter in the final stretch without friction.
Why can Grupo Santa Marta move so fast on equity gaps?
Permanent capital already committed (no fundraising needed), we know most of the key investors in the Spanish search fund ecosystem (trust already exists), and we've spent years specialising in this exact situation. When someone calls with an equity gap, we know exactly what to do.

Have an equity gap to close?

Committed capital. We know the ecosystem. Analysis in days. Let's talk this week.

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Also read: Search Funds in Spain — Complete Guide · For Co-Investors