Search Funds in Spain:
Everything You Need to Know
Spain is the #2 search fund market in the world — and one of the most compelling places to run a search. Whether you are a first-time searcher or an investor evaluating the asset class, this is where we lay out everything: the model, the data, the market, and our approach.
What is a Search Fund?
A search fund is an investment vehicle through which an entrepreneur — the searcher — raises capital from investors, spends 18–24 months searching for a privately held business to acquire, and then takes over as the operator-CEO of that company.
Unlike venture capital, which bets on high-growth startups, or traditional private equity, which manages many companies at once, the search fund model centers on a single entrepreneur acquiring a single, established, cash-flow-positive SME — typically in a succession scenario — and building it with long-term ownership discipline.
The model was born at Harvard Business School in 1984, when Professor H. Irving Grousbeck and MBA student Jim Southern raised the first documented search fund. Stanford GSB subsequently built the definitive longitudinal research program that now tracks hundreds of funds worldwide. Today the asset class has a recognized curriculum at Harvard, Stanford, INSEAD, IESE, IE, Chicago Booth, LBS, and Yale SOM.
The practice of acquiring and operating an existing business — contrasted with building a startup from scratch. Search funds are the most structured, investor-backed form of ETA.
- Searcher: The entrepreneur leading the search and eventual acquisition
- Search capital: Funds raised for salary & costs during the search phase (typically €300K–€500K in Spain)
- Promote / Carry: Economic interest granted to the searcher — typically 15–30% equity in the acquired business
- Equity gap: Additional equity needed to bridge leverage or close the deal structure
- Permanent capital: Investor capital with no mandatory exit horizon — the investor's ideal is to hold the business indefinitely
What the Research Actually Shows
Three decades of longitudinal data from Stanford GSB, IESE Business School, and Harvard Business School provide one of the most comprehensive return datasets in private markets.
From Fundraise to Exit:
The Four Phases
Each phase presents different challenges and requires different support. Understanding this structure is essential for both searchers and investors.
Search Capital Raise
The searcher raises a small fund — typically €300K–€500K in Spain — from 10–20 investors. This capital covers salary, travel, deal costs, and advisors for 18–24 months. Investors receive pro-rata rights to invest at acquisition on favorable terms and typically form the future board.
Active Search & Sourcing
The searcher proactively identifies and evaluates acquisition candidates. In Spain, the best targets are rarely in broker databases — they are found through direct outreach to business owners and trusted intermediaries. Per Stanford's 2024 data, a typical searcher evaluates hundreds of companies, submits a handful of LOIs, and closes one deal.
Acquisition & Closing
Once an LOI is signed, due diligence (financial, legal, commercial, operational) and deal structuring begin. Key considerations in Spain include SPV/NewCo setup, financial assistance rules (LSC Art. 150), bank financing (typically 2–3x EBITDA senior debt), and seller financing (pagaré del vendedor).
Operations & Value Creation
The searcher becomes an operator-CEO — earning a median salary of $190K (Stanford 2024) plus equity that vests over time against performance. Value creation over 5–10 years: professionalizing management, improving margins, deepening customer relationships, building scalable processes. Investors participate at board level with no artificial exit timeline.
Traditional Search Fund vs. Self-Funded Search
- Raises €300K–€500K in search capital upfront
- Salary & operating expenses fully covered during search
- Investors receive preferential terms and step-up at acquisition
- Typically 20–30% economic carry (promote) for the searcher
- Stronger investor involvement = more governance support
- Best for: first-time searchers, complex deals, higher deal sizes
- Searcher self-finances the search phase
- No upfront dilution from search capital investors
- Faster, more confidential process
- Higher equity retention at acquisition (50%+)
- More flexible on deal size and structure
- Best for: experienced operators, smaller deals, sector specialists
Both models are active in Spain. Grupo Santa Marta invests in both — what matters to us is the quality of the entrepreneur and the discipline of the process.
Why Spain Is the #2 Search Fund
Market in the World
According to the 2024 IESE International Search Fund Study (conducted with Stanford GSB), Spain holds more search funds than any other country outside North America — with over 60 completed acquisitions in 11 years. That is not an accident.
The Succession Wave
Spain has over 3 million SMEs, many owned by founders aged 55–70 with no prepared successor. This creates a natural, low-competition acquisition pipeline for operators who approach these situations with empathy and rigor.
An International Talent Pool
IESE was the first business school outside North America to offer a dedicated search fund course. But today's Spanish searcher pool is broader: IESE, IE, ESADE, LBS, INSEAD, Chicago Booth, and Yale SOM alumni — including a growing contingent of Spanish and Latin American professionals who bring cross-border networks and bilingual deal capability.
Improving Bank Access
Santander, BBVA, CaixaBank, and Sabadell now have dedicated units familiar with search fund structures. Senior leverage of 2–3x EBITDA is achievable for quality targets, with increasing openness to cash-flow lending in succession scenarios.
A Maturing Investor Ecosystem
Spain has a meaningful expansion of dedicated search fund investors — family offices, returned searcher-operators, and cross-border investors. The 6th IESE International Search Fund Conference in Barcelona (October 2024) reflected a market that has moved from emerging to established.
Attractive Multiples
Acquisition multiples in Spain are generally lower than in North America and Northern Europe. Combined with a large succession opportunity set, Spain offers a favorable entry point that more competitive markets cannot replicate.
Gateway to LatAm
Spain's cultural, linguistic, and legal proximity to Latin America creates a uniquely bilingual deal landscape. Spanish and LatAm professionals running searches in Spain bring networks that create proprietary deal flow and relationship advantages unavailable to non-Iberian searchers.
How Grupo Santa Marta
Partners with
Searchers
We are not a fund with a mandate and a clock. We are a permanent capital partner — one that has operated SMEs, sat in the CEO chair, and carried payroll. That difference shapes everything about how we invest.
Search Capital
We invest in searchers at the earliest stage — before a target is identified. If we believe in the entrepreneur and the thesis, we commit search capital and become an active partner from day one.
Acquisition Equity
At closing, we invest alongside the searcher as part of the equity group. We design cap tables for durability — conservative leverage, clear governance, and operator-capital alignment from day one.
Equity Gap Solutions
When the deal is right and the structure needs reinforcing, we provide the equity gap. Seller notes, earnouts, rollover structures — we have structured and closed these in Spain.
Operational Partnership
Post-closing, we are active board members, not passive observers. First 100-day cadence, KPI dashboards, cash management, hiring — we bring real operator judgment to every board meeting.
Are you running a search — or thinking about it?
Talk to UsWhat We Look For
in a Searcher and a Deal
The Searcher
- Intellectual rigor and genuine operational curiosity
- Track record of leading under pressure — not just analysis
- Clear motivation for the search fund path
- Coachable and direct in communication
- Alignment on governance and investor relations from day one
The Business
- Stable, recurring, or contracted revenue streams
- EBITDA margins above 10–15% with improvement path
- Low customer concentration (no single client >30% of revenue)
- Willing seller with structured transition
- Defensible market position; not reliant on a single key person
- Typically €5M–€30M enterprise value (flexible for the right deal)
What We Avoid
- Competitive processes where speed replaces discipline
- Aggressive leverage that eliminates operational flexibility
- Unclear or fragmented governance structures
- Turnaround situations without a clear operational thesis
- Deals where operator-investor alignment is ambiguous
Common Questions
About Search Funds in Spain
A search fund is an investment vehicle where an entrepreneur raises capital to find, acquire, and operate a single privately held SME with stable cash flows. The model was created at Harvard Business School in 1984 and now has decades of institutional backing. Stanford's 2024 Search Fund Study shows a 35.1% aggregate pre-tax IRR across all funds.
Spain is the #2 market globally, behind only the US. The 2024 IESE International Search Fund Study (conducted with Stanford GSB) confirms Spain has recorded more search funds than any country outside North America, with 60+ completed acquisitions in 11 years and ~60 active searchers at time of publication.
Per Stanford GSB's 2024 study (the most authoritative longitudinal dataset): 35.1% aggregate pre-tax IRR (all funds), 42.9% for exited funds, 4.5x aggregate ROI. Operators who successfully acquire earn a median $1.98M in equity per person, with a median CEO salary of $190K post-acquisition. Spain's more conservative leverage environment may produce more moderate but stable return profiles.
No. While many searchers come from IESE, IE, LBS, INSEAD, or Chicago Booth, experienced operators without MBAs also run successful searches. What matters is demonstrated operational capacity and the ability to attract investor conviction. Spanish and LatAm professionals are an increasingly active part of the searcher ecosystem.
We are permanent capital — no portfolio fund, no exit pressure, no artificial timeline. We have operated businesses ourselves. We invest across the full lifecycle and participate actively at board level with direct Spanish market relationships with lenders, advisors, and sector contacts.
Unlike traditional PE with portfolios of many companies, search funds are led by a single operator-entrepreneur fully dedicated to one business — creating deep alignment between capital and management that institutional PE cannot replicate at this deal size.
Yes — and it is growing fast. IESE hosts the biennial International Search Fund Conference (6th edition, Barcelona, October 2024). IE and ESADE have active ETA tracks. There are active networks of searchers, investors, and M&A advisors in Madrid and Barcelona, with a growing LatAm professional cohort adding international depth.
Practical Insights from the Front Lines
Best Search Fund Investors in Spain
Search Funds in Spain: A Practical Guide
How to Win the Seller's Trust in Spanish Business Succession
Bank Financing for SME Acquisitions in Spain
Seller Notes & Earn-Outs: When They Help and When They Don't
The First 100 Days: An Operator's Playbook
Ready to Start Your Search—
or Already Running One?
We respond to every serious inquiry. Early-stage conversations are welcome — even before you have a target or a fully formed thesis.