Big Deal Small Business

Investing: Underwriting the Searcher

The blog explains why underwriting the searcher— the entrepreneur‑operator— is critical in search‑fund investing, where small businesses rely heavily on leadership grit. Unlike private‑equity deals that focus on scale and industry, search funds often lack seasoned CEOs, making operator quality a primary return driver. The author contrasts two investor approaches: broad indexing of many searchers versus selective underwriting based on pattern‑recognition from extensive founder interactions. He notes a recent dip in median deal quality, heightening the need for rigorous searcher assessment.