This post was originally printed in Issue 34 of Acquisition Aficionado

In the search fund space, buying a business usually conjures images of a full-time, stressed-out, all-in buyer (known as a “searcher”) seeking their dream business. However, a recent Book Club event and discussions at the Self-Funded Search Conference prompted me to think critically about searching part-time. This article aims to unravel conventional wisdom, particularly the challenges and opportunities for those who can’t forsake their current employment entirely. I invite aspiring searchers to reassess preconceptions about business acquisition and consider the full spectrum of possibilities the search fund models present.

Traditional vs. Self-Funded Search Models

The traditional or “core” model of search funds involves funding an aspiring acquisition entrepreneur’s search for a small-to-mid-sized business that is stable, profitable and enduring. It makes sense for a funded searcher to spend 100% of their time sourcing an acquisition target – because they are being funded to find a solid business at a great price. For the self-funded model, the searcher relies on their personal resources, such as a spouse’s salary or savings, to fund their search. Since the self-funded search came to the fore, the guidance has been to mimic the traditional or core search approach by dedicating full-time to the search.

Yet, full-time effort is suitable for a self-funded searcher only if they have the financial bandwidth and career stability to do so. I speak with many underrepresented searchers who keenly feel career and economic vulnerability. If they jump off the corporate ladder, they question if they can jump back on or else find a soft-landing spot in the event their search concludes without buying a business. When you consider statistics showing that Black and Hispanic people and women in the United States have far less wealth compared to their white and/or male counterparts, their perceptions on the consequences of the risks take shape. Author Ana Hernández Kent prepared an illuminating infographic based on Federal Bank of Saint Louis data, which can be found at https://bit.ly/4eWMDdM.

One reason I built the EtA Launch Hub, a pre-accelerator, was to ensure that professionals have ramped up their search efforts sufficiently before quitting their day jobs or in the case of students, before they graduate. According to Searchfunder data, the average time for searchers, irrespective of their model, is approximately 22 months. This ramp-up approach aims to make that period as effective as possible.

For a recent Book Club, we read Reginald Lewis’ story and spoke with his wife Mrs. Loida Lewis about how he bought a $1 billion business in the 1980s, the largest deal of its day, while managing his private law firm. It took him multiple attempts to close his first deal, reading prospectuses at night and on weekends. Reflecting on his story of buying a business without much support, it’s clear that a part-time search today is a much more viable option with all the infrastructure and resources available.

As I speak with searchers who have acquired businesses, I’m increasingly inclined to think that self-funded searchers should mimic the advice given to start-up entrepreneurs: work nights and weekends until you can’t take it anymore, then quit your day job. First, the data from SIG’s 2023 Self-Funded Search Study suggests that while full-time self-funded searchers tend to acquire their businesses faster than their part-time counterparts, a full 75% of the self-funded searchers studied acquired a business within 18 months.

Figure 6: Duration of Search Phase to Closing an Acquisition
Source: Search Investment Group (SIG), “2023 Self-Funded Search Study | Selected Observations,” page 19. Used with permission.

Secondly, I have heard various points of view from self-funded searchers who have successfully acquired businesses. Some told me privately in hushed confessional whispers that deal sourcing, especially if you are looking at brokered deals, is not a full-time job. Others have reached the 24-month mark of a full-time search and been forced to seek gig work to fund diligence costs and make the rent. They’ve expressed regret about not keeping their day jobs longer to accrue more savings. I know a searcher who quit their day job just weeks before closing, only to have the deal fall apart. Despite the best-laid plans, he found himself in financial limbo; he confessed that he could not afford a long period of unemployment. He subsequently scrambled to obtain a new salaried position and then relaunched his search.

So I asked myself, “What are the best practices for a part-time search?” assuming a searcher has some work flexibility to meet with brokers or business owners. To explore this, I used VAULT, the AI-powered digital video channel housing over 2,000 videos on acquisition entrepreneurship.
Blending insights from the experiences of searchers like Will Gano and Jordan Carter and others within VAULT, this article delves into three keys for successful part-time searching: Efficiency & Time Management, Determination & Patience, and Knowing When to Switch from Part-Time to Full-Time.

Efficiency & Time Management

For part-time searches, the adage “If you want something done, give it to a busy person” might be apt because feeling busier might lead you to being more productive. As Elliott Holland says, “You have to be more scrappy, more efficient, and more thoughtful about where you make investments to what I call ‘multiply your time.’” Time multipliers could include a coach, a river guide, or a buy-side advisor along with the deal professionals you assemble. Will Gano talks about using brokers because they already have “activated sellers.” He gravitated toward regional brokers and then engaged a buy-side firm for a “semi-proprietary” search. He eventually was able to buy a “good business at a good price.” Will cautions that, even with a buy-side firm, some luck is still involved. Using brokers or buy-side advisors is a way to piggyback onto others’ relationships and efforts to find business owners inclined to become business sellers.

Regardless, honing your efficiency and time management is an excellent skill to develop for your new CEO role.

Determination & Patience

As a searcher, you must have the determination to get a deal done and the patience to avoid a mediocre to bad deal. This need is magnified during a part-time search because there will be many distractions and many low points of dejection that could cause an aspiring entrepreneur to seek the nearest off-ramp.

Will’s story is a perfect example of combining determination and patience, which guided him through a ten-year journey and four-year part-time search toward acquiring a bakery ingredient manufacturing business. At one point, his buy-side advisor suspended the relationship because the available companies had been vetted and picked over. His story parallels Jordan Carter’s three-year relentless quest to purchase a company in the grant space, characterized by a dedication that turned potential defeat into victory. As a part-time searcher, you may need to step back from your search occasionally for your job, family well-being, and even your sanity. If you find yourself lacking focus, determination, or a get-up-and-go attitude for an extended period, you may wish to assess whether you have the right commitment and infrastructure to succeed in buying a business.

Knowing When to Switch from Part-Time to Full-Time

When Jordan started searching in early 2018, equity capital was not available for self-funded searchers to close a deal. At that time, he felt he needed to cover his living expenses plus the full down payment for the business he planned to buy. Coming from a modest background, a part-time search made sense to him and helped him preserve capital for an acquisition, even though he was willing to use his 401k. Jordan describes going through “a psychological metamorphosis, if you will, of commitment.”

Searching is an iterative learning process. Jordan discovered that switching to full time accelerated his learning curve:

“When you’re part-time searching, your rate of learning is much lower than if you’re full-time throwing your whole body into the arena and getting torn to shreds. You throw yourself in there, and you’ll come out and think, ‘Okay, I’ve got to change something tomorrow.’ In a part-time search, it’s like you discover that after a two-week period. You learn something after two weeks that could have taken you one day if you were full-time searching.”

Jordan’s story underscores that shifting from part-time to full-time searching may be pivotal in accelerating the acquisition process.

Conclusion

Entrepreneurship through acquisition is evolving, offering more flexibility for aspiring business buyers. As you consider whether to pursue a full-time or part-time search, or transition from one to the other, it’s vital to weigh career and financial trade-offs against your goals. By integrating efficiency, determination, and flexibility into your search strategy, you can successfully navigate the path to acquiring a business that fits your vision. As always, I welcome your respectful comments and feedback on this evolving space.

By Karen Spencer, Founder, Fetch Strategies, FetchStrategies.com.

About Karen Spencer

Karen caters to the growth-minded by blending consulting, coaching, and innovative resources, all backed by practical experience and Ivy League rigor. Through Fetch Strategies, she supports individuals, teams, and businesses in launching and growing their ventures. Karen is a highly respected thought leader and advocate for diversity, equity, and inclusion, focusing particularly on the investment niche known as search funds.

Referred to as the Walking Search Fund Wiki, the EtA Encyclopedia, and affectionately, Mrs. Searchfunder, Karen uses her extensive knowledge to develop pioneering programs. She is the creator of the EtA Launch Hub, a pre-accelerator that equips aspiring entrepreneurs with the skills necessary for success. Her innovations include the EtA Guidebook, VAULT – an AI-powered digital video channel, and the TakeOff training program, all tailored for those passionate about acquisition entrepreneurship.

Karen’s dedication extends to building pathways for diverse entrepreneurs, laying the groundwork for future accelerator programs and investment vehicles. Having co-founded Searchfunder, an online community approaching 40,000 members, she has been championing BIPOC, women, and other underrepresented groups since 2015. Although no longer actively part of Searchfunder’s day-to-day operations, she remains an influential champion in the Acquisition Aficionado community.