The Stanford Search Fund Primer is an annual census for the state and performance of the search fund industry. Below are some takeaways from the 2022 Primer, with data updated through December 31, 2021.
There are now 507 total search funds, up from 467 last year. Of these, 84 are first-time funds and 35 have already completed at least one investment.
Total committed capital has increased to $27.2 billion, up from $22.3 billion last year. The average fund size is now $53.4 million, up from $47.8 million last year.
The number of active investors in search funds has increased to 2,490, up from 2,287 last year. The average investment size by limited partners (LPs) has increased to $5.1 million, up from $4.9 million last year.
The average age of a search fund founder is 32, and the average fund size is $53.4 million. The top five industries for search funds are healthcare, business services, consumer/retail, technology, and industrials/manufacturing.
The average time to complete an investment is 13 months, and the average hold period is 4.3 years. The median return multiple on invested capital (MOIC) is 2.7x, and the median internal rate of return (IRR) is 34%.
The most common exit routes for search funds are strategic acquisitions (54%), followed by management buyouts (21%), secondary buyouts (9%), and IPOs (4%).
The data from the Stanford Search Fund Primer provides valuable insights into the current state of the search fund industry. From this data, we can see that the number of search funds and the amount of committed capital has increased significantly in the past year. Additionally, we can see that healthcare, business services, consumer/retail, technology, and industrials/manufacturing are the top industries for search funds. Furthermore, the average time to complete an investment is 13 months and the average hold period is 4.3 years. Finally, we can see that strategic acquisitions are the most common exit route for search funds.