The Model

Search fund
An investment vehicle through which one or two entrepreneurs raise money from a group of investors to find, buy and lead a single established private company. Investors fund the search first; when the searcher finds a company, they get the right, not the obligation, to invest in the acquisition. The model was born at Harvard Business School in 1984, and Spain is now its largest market outside the US and Canada (IESE, 2026). How the model works.
Searcher
The entrepreneur who raises a search fund, runs the search and, once the deal closes, becomes CEO of the company. Searchers work alone or in pairs. The median new searcher is 34 at launch (IESE, 2026).
Entrepreneurship through acquisition (ETA)
Becoming an entrepreneur by buying and leading an existing business instead of starting one from scratch. Search funds are the most structured, investor-backed form of ETA; self-funded searches and long duration enterprises are others.
Traditional search fund
Also called a core or funded search fund. A group of investors buys units of search capital to pay the searcher's salary and search costs. In return, each investor gets the right to invest their pro rata share in the acquisition and a step-up on the search capital they put in.
The searcher pays for the search personally and raises equity only once a company is under LOI. The searcher keeps a larger share of the company and carries more personal risk. In the US, self-funded searchers often finance the purchase with an SBA 7(a) loan.
Long duration enterprise (LDE)
A search vehicle built to own the acquired company for the long term, with no plan to sell within a set period. Also called a long-term hold or committed capital vehicle. The IESE 2026 study identified 13 recently launched international LDEs, with about twice as many entrepreneurs raising one.
Permanent capital
Capital with no date by which it must be returned. A closed-end fund has to sell its companies and give investors their money back within a fixed term; a permanent capital investor can hold a company for as long as holding is the right call. Santa Marta invests from a permanent capital base. What changes without a fund clock.
Search capital
The money a searcher raises to pay a salary and the costs of the search: travel, advisors and early deal expenses. It is usually sized to last up to about two years. In a traditional search fund it is raised in units and rolls into the acquisition with a step-up.
Step-up
The premium search investors receive when their search capital converts into equity in the acquisition: every euro or dollar of search capital is credited at more than face value in the acquisition round. The exact step-up is set in the search fund's terms.
Searcher equity (carry or promote)
The share of the company the searchers earn for finding, buying and leading it. In a traditional search fund it usually vests in three tranches: one at closing, one over time as the searchers stay, and one when investors reach agreed return thresholds.

Capital and the Cap Table

Cap table
The record of who owns what in a company, and on what terms. In a search fund it typically includes the searchers, the search investors, any co-investors and sometimes the seller.
Pro rata right
An investor's right to invest in a later round in proportion to their existing stake. In a traditional search fund, search investors have the right, but not the obligation, to fund their share of the acquisition equity.
Equity gap
The difference between the total equity needed to close the acquisition and the equity cap table investors actually confirm at closing. It opens when some search investors pass on the deal or invest less than their pro rata share. Closing it is the investment Santa Marta makes most often. How we close equity gaps.
Co-investor
An investor who joins a specific deal alongside the existing investors, usually at the acquisition, without having funded the search. Co-investing with us.
Minority stake
A holding below 50% of a company. A minority investor cannot control the company alone, so protection comes from the shareholders' agreement: board seats, information rights and consent over major decisions. Santa Marta invests as a minority shareholder for the most part.
Shareholders' agreement
The contract among a company's shareholders that sets how it is governed and how shares can change hands: board composition, decisions that need investor consent, information rights, and transfer rules such as pre-emption, drag-along and tag-along.

The Deal

Letter of intent (LOI)
A short document in which the buyer proposes price, structure and key terms, and asks for a period of exclusivity to complete due diligence. It is mostly non-binding, except for clauses such as exclusivity and confidentiality.
Due diligence
The buyer's investigation of the company before committing to buy it: financial, legal, tax, labor, commercial and operational. Adverse due diligence findings are the reason recent searchers cite most often for not completing a deal after a signed LOI: 59% pointed to them (IESE, 2026).
Quality of earnings (QoE)
A financial due diligence report, usually prepared by an accounting firm, that tests whether reported EBITDA is real and repeatable by stripping out one-off items, owner-related costs and accounting choices.
EBITDA
Earnings before interest, taxes, depreciation and amortization. A rough measure of the cash a business generates from its operations, and the base for most small and mid-sized company valuations and for sizing bank debt.
Adjusted EBITDA
EBITDA corrected for items that will not repeat under new ownership: one-off costs, an owner's salary above or below market, personal expenses run through the company. Most valuation arguments start here.
Enterprise value and equity value
Enterprise value is what the business is worth regardless of how it is financed. Equity value is what the shareholders receive: enterprise value minus net debt, adjusted for working capital and any other items the contract specifies.
Acquisition multiple
The price paid divided by a profit measure, usually EBITDA. The median international search fund acquisition was priced at 5.7 times EBITDA, against 6.3 times in the US and Canada (IESE, 2026). More from the IESE 2026 study.
Share purchase agreement (SPA)
The binding contract to buy the company's shares. It sets the price and how it adjusts, the seller's representations and warranties, indemnities, and the conditions that must be met before closing.
Representations and warranties
Statements the seller makes in the SPA about the company: its accounts, contracts, taxes, employees and disputes. If one proves untrue, the buyer can claim compensation within the limits and time periods the contract sets.
Locked box and completion accounts
Two ways to set the final price. With a locked box, the price is fixed on a past balance sheet and the seller promises that no value leaves the company before closing. With completion accounts, the price is adjusted after closing to the actual net debt and working capital on the closing date.
Working capital peg
The normal level of working capital (receivables plus inventory, minus payables) the business needs to operate, agreed in the SPA. If working capital at closing comes in below the peg, the price goes down; if above, it goes up. Where working capital traps hide.
Signing and closing
Signing is when buyer and seller sign the SPA. Closing is when the conditions are met and the shares and the money actually change hands. They can happen on the same day or weeks apart, for example while financing or third-party consents are finalized.
Seller note
Part of the price the seller agrees to receive later, as a loan to the buyer that is repaid over an agreed period and usually ranks behind the bank debt. It reduces the cash needed at closing and keeps the seller invested in a good handover. Seller notes and earn-outs.
Earn-out
Part of the price paid only if the business hits agreed targets after closing, such as revenue or EBITDA. Useful when buyer and seller see the future differently; a common source of disputes when the targets or the buyer's obligations are loosely defined.
Equity rollover
When the seller reinvests part of the sale proceeds in the buyer's company and keeps a minority stake. It keeps the seller aligned with the company's future and reduces the cash needed at closing.
Business succession
The handover of a company by an owner who wants to step back, often without a family member ready to take over. It is one of the most common reasons owners sell to searchers, and the reason trust weighs as much as price. Winning a seller's trust.

Financing and Spanish Law

NewCo (acquisition vehicle)
The company created to make the acquisition. Investors put their equity into NewCo, NewCo takes on the acquisition debt, and NewCo buys the shares of the target. Also called the SPV.
Senior debt
Debt that is repaid first and is usually secured, typically a bank loan. In an acquisition it is sized on the cash flow the company can reliably generate; other lenders, such as a seller note, rank behind it.
Leverage (net debt to EBITDA)
How much debt a company carries relative to its earnings, usually net debt divided by EBITDA. Banks use it to size acquisition debt and to set covenants. What a lender will accept depends on the bank, the sector and the cycle.
Covenants
Conditions in a loan agreement the borrower must meet, such as a maximum leverage ratio or a minimum debt service coverage, plus limits on dividends, new debt or asset sales. Breaching one lets the lender renegotiate and, at worst, demand early repayment.
Debt service coverage ratio (DSCR)
The cash flow available to service debt divided by the principal and interest due in the period. Below 1.0, the business cannot pay its debt out of its own cash.
Free cash flow (FCF)
The cash a business generates after operating costs, taxes, changes in working capital and capital expenditure. It is what actually repays debt and funds growth.
Financial assistance (asistencia financiera)
Spanish company law bars a company from advancing funds, granting loans or guarantees, or giving any other financial assistance for the purchase of its own shares: article 143.2 of the Ley de Sociedades de Capital for limited companies (SL), which also covers shares of companies in its group, and article 150 for corporations (SA), which also covers shares of its parent and allows narrow exceptions, such as helping employees buy shares. In practice, the target cannot guarantee or secure the debt used to buy it. That shapes the structure: the debt sits in NewCo, secured on the shares it buys, until a merger brings it together with the cash flows that repay it. Bank financing for search funds in Spain.
Leveraged merger (fusión apalancada)
The merger of NewCo and the target after a debt-financed acquisition, so the acquisition debt ends up in the same company as the cash flows that repay it. When the debt was taken on in the previous three years, Spanish law (Real Decreto-ley 5/2023, article 42) requires the merger plan to state the resources and timing for repaying it, the directors' report to justify the acquisition and the merger with an economic and financial plan, and an independent expert to give an opinion on whether those statements are reasonable, even if shareholders approve the merger unanimously.
SBA 7(a) loan
The US Small Business Administration's main government-guaranteed loan program, widely used by searchers in the US, especially self-funded ones. Loans go up to $5 million. Search funds in the US and Spain.

Buy-and-Build

Buy-and-build (roll-up)
A strategy that starts with one strong company, the platform, and grows it by acquiring smaller complementary businesses, the add-ons, and integrating them into one group. Also called a roll-up or platform consolidation; the terms are used interchangeably. Our buy-and-build playbook.
Platform company
The first and usually largest company in a buy-and-build, with the management team, systems and finance function able to absorb add-ons.
Add-on (bolt-on)
A smaller company acquired and integrated into a platform. Its value depends less on its own numbers than on what it adds to the group: customers, geography, capabilities.
Multiple arbitrage
The value created when small companies are bought at lower multiples than the larger group they join is worth. It is the arithmetic behind every roll-up, and it only holds if the integration is real and the entry price stays disciplined.
Integration debt
The backlog of unfinished integration work that builds up when a platform closes acquisitions faster than it can absorb them: systems never unified, processes never standardized, teams never truly merged. Why most roll-ups fail.
Fragmented market
A market with many small companies and no player holding a large share. Fragmentation is the precondition for a buy-and-build, because it supplies the add-ons.

Returns and the Research

ROI (MOIC)
Return on investment, also called multiple on invested capital: how many times the capital invested comes back. If investors put in 5 million and receive 10 million, the ROI is 2.0x. International search funds have returned 2.8x in aggregate (IESE, 2026); US and Canadian funds, 4.75x (Stanford GSB, 2026).
IRR
Internal rate of return: the annual compounded return, taking into account when money goes in and when it comes back. The same ROI earned faster produces a higher IRR. International search funds: 30% in aggregate (IESE, 2026); US and Canada: 33.9% (Stanford GSB, 2026).
Acquisition rate
The share of concluded searches that end in an acquisition: 73% for search funds outside the US and Canada, against 58% in the US and Canada (IESE, 2026).