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When we look at what has made the SF model successful and trace it back to its origins 40 years ago, most pioneers agree: the first wave of searchers were young professionals, often pursuing an MBA at a top business school, eager to transition from careers in banking, consulting, or PE into entrepreneurship, ready to acquire, lead and grow a company.
This transition into the role of a future CEO was possible thanks to the mentorship and support searchers received from their investors, many of whom were seasoned entrepreneurs themselves. These investors were often motivated more by the idea of “giving back” than by seeking outsized returns.
Capital was essential, but far from sufficient. The most successful journeys, from the early search phase to scaling the acquired company, were defined by investors who contributed knowledge, experience, networks, and mentorship that profoundly shaped the trajectory of both the searcher and the business they would eventually lead.
Today, the SF ecosystem is expanding rapidly across the globe. In places like Europe and Latin America, it is not unusual to hear “old players” (many of whom have only been active for 5–6 years) criticize the influx of new participants—successful entrepreneurs, family offices, and funds led by former PE or VC professionals—claiming they don’t fully understand the drivers of success in the SF model, and that they are unwilling to play the essential role of mentors.
But the reality is more nuanced. I am often surprised to hear veterans speak negatively about newcomers. Given that many “established” investors operate with small teams (2–3 professionals), while managing portfolios of 60–70 active searchers and 30–40 acquired companies, on top of evaluating new searchers and deal flow each quarter, it is difficult to see how they can meaningfully support every entrepreneur throughout all phases. Perhaps instead of resisting, they should welcome these new players, help them better understand the industry, and delegate part of the mentorship role to local investors, sector experts, and regional networks.
The challenge remains the same: supporting searchers takes time. Meanwhile, the risk of failure is increasing. Reports from Stanford and IESE show a rising number of searchers who never succeed in acquiring a company, and the extraordinary returns of the past may not be sustainable as the sample size grows. In this context, the entry of new investors, especially those bringing local expertise in Latin America, Europe, or Asia, is good news. They provide more balanced cap tables and ensure searchers can access meaningful local support.
For many first-time CEOs, the SF journey is both exhilarating and daunting. Investors play a critical role in ensuring searchers are not navigating this process alone by providing:
- Mentorship and guidance during the search phase, helping evaluate opportunities, structure deals, and negotiate with sellers, while avoiding common pitfalls.
- Credibility, since a strong cap table of respected investors lends weight to the searcher’s approach. For business owners considering succession, knowing the buyer is backed by credible partners can be the difference between a closed door and a meaningful conversation.
- Emotional support, which is often overlooked. The search journey is lonely, and investors who make themselves available to listen, advise, and encourage can significantly strengthen a searcher’s resilience through inevitable setbacks.
Once the acquisition is complete, the nature of investor support evolves. The searcher becomes a CEO, and the company enters a transformative phase. At this stage, investors can add lasting value by providing:
- Strategic guidance: helping define long-term strategy with a balance of ambition and realism.
- Industry expertise: accelerating the learning curve and avoiding costly mistakes in sectors such as software, healthcare, industrial automation, or consumer goods.
- Networks and resources: opening doors to seasoned executives, strategic partners, and customers that would otherwise take years to reach.
- Governance and discipline: fostering professional structures, accountability, and robust reporting to support sustainable growth.
What distinguishes the SF model from other PE approaches is the depth of alignment and partnership. Investors are not just financiers, they are long-term partners who invest time, wisdom, and trust. They stand beside searchers as they grow into the CEO role, and continue to support the business as it matures.
Most acquired companies come from family-owned contexts, where stewardship and continuity matter as much as financial returns. Investors who provide value beyond capital not only help these businesses thrive but also preserve legacies while enabling growth.
Ultimately, success is measured not just by financial returns but by the impact of collective effort. Investors who mentor, advise, and open doors turn the search journey into a shared endeavor. That is why searchers must carefully choose who they bring onto their cap table, asking other entrepreneurs whether those investors truly add value and remain accessible throughout every phase. A balanced mix of private investors, family offices, and professional funds, both established and new, can be a winning formula.
Some investors have already set a high bar. Pacific Lake, for instance, provides structured support across all phases. Once searchers step into the CEO role, they offer programs such as a “Compass Platform,” a 100-Day Plan, an Early CEO Summit, a Pricing Bootcamp, hiring support, and a High-Performance Growth Organization Summit. This is a powerful example of how investors can add real value to entrepreneurs, and one we hope more leading investors in less mature markets will follow. After all, mentorship and guidance remain what searchers truly need.
