Search Funds - 2013: Selected Observations

Since 1996, the Center for Entrepreneurial Studies (CES) at the Stanford Graduate School of Business has conducted a series of studies on the performance of search funds.  This study, as well as its predecessors, has endeavored to gather data and gain insight into all known search funds.  Each of these studies portrays the aggregate characteristics of search funds, presents their principals’ backgrounds, and evaluates the investment returns generated by first-time search funds to their original investors.  This series of studies reflects changes in the characteristics of search fund entrepreneurs and the performance of their funds over time.  For this study, using conservative assumptions, the aggregate pre-tax internal rate of return of the search fund asset class through year-end 2013 is 34.9 percent, and the aggregate pre-tax return on invested capital is 10.0x.