What happens if a searcher fails to find a company to acquire?

Approximately 20% of search funds fail to complete an acquisition within the search period, resulting in a complete loss of the initial search capital for investors. This represents one of the key risks of the search fund model. Several factors contribute to failed searches: the searcher may be too selective or unrealistic in target criteria, market conditions may make valuations prohibitively expensive, promising opportunities may fall through when sellers decide not to proceed, or the searcher may lack the persistence or relationship skills needed to convince owners to sell. When a search fund fails to acquire, investors lose their initial investment of €15,000-30,000 each, totaling €300,000-500,000 collectively. However, sophisticated search fund investors understand this risk and typically diversify by backing multiple searchers simultaneously. The 'portfolio approach' means that if an investor backs 10 searchers, they expect 2 to fail, 7-8 to acquire companies, and 5-6 of those acquisitions to perform well. The successful investments generate sufficient returns to more than compensate for the failed searches. For the searcher, a failed search is personally and professionally disappointing but not financially catastrophic since they received salary during the search period. Many searchers who fail to acquire eventually join traditional companies, become consultants, or try again with a new search fund after gaining additional experience. Some transition into investor roles, using their search experience to advise other searchers. The search fund community generally remains supportive even of searchers who don't complete acquisitions, recognizing that the challenging market dynamics are often beyond individual control. Investors may offer to fund a second search for promising searchers who demonstrated strong discipline and effort but were unlucky in finding suitable targets. The failure rate underscores why investors focus heavily on the quality and character of the searcher rather than any specific business opportunity—they're betting on the person's ability to navigate uncertainty and build value once an acquisition is completed.