What role do legal advisors play in structuring search fund deals?

Legal advisors specializing in search funds provide critical expertise throughout the lifecycle—from initial fundraising through acquisition to eventual exit. Unlike general corporate lawyers, search fund specialists understand the model's unique dynamics and can structure transactions efficiently while protecting all parties' interests. During the fundraising phase, lawyers draft the search fund operating agreement or statuts governing the relationship between searcher and investors. This document specifies the searcher's responsibilities, investor rights, funding mechanics, and what happens if no acquisition occurs. French search funds require particular attention to legal forms—typically structured as SAS (Société par Actions Simplifiée) for flexibility—and compliance with French securities regulations regarding private placements. Lawyers also prepare subscription agreements for investors and ensure proper regulatory filings. The acquisition phase demands intensive legal work. Lawyers conduct legal due diligence reviewing contracts, corporate records, litigation history, intellectual property registrations, employment agreements, regulatory compliance, and potential liabilities. They identify deal-breakers like environmental contamination, undisclosed lawsuits, or intellectual property disputes. The purchase agreement represents the most complex document, typically 50-100 pages covering purchase price and payment mechanics, representations and warranties from both parties, conditions precedent to closing, indemnification provisions protecting the buyer, non-compete and non-solicitation agreements, transition services from the seller, and post-closing adjustment mechanisms. French search fund lawyers must navigate specific issues including droits d'enregistrement (registration duties) that vary between asset and share purchases, social law considerations around employee transfers under French labor code, and structuring equity grants to searchers within tax regulations that prohibit simple equity gifts. Lawyers also coordinate with notaires when real estate transfers are involved. Debt financing introduces additional legal work—negotiating credit agreements with banks, drafting security documents creating liens on assets, ensuring intercreditor agreements when multiple lenders are involved, and reviewing covenant packages that constrain operational flexibility. Experienced search fund lawyers know market standards and can negotiate favorable terms. Post-acquisition, lawyers assist with governance documentation including board meeting minutes and shareholder agreements, employment contracts for the searcher-CEO with appropriate equity incentives, intellectual property assignments and registrations, and regulatory compliance in areas like data protection (GDPR in Europe) or industry-specific licensing. During the exit phase, lawyers manage the sale process including preparing disclosure schedules, negotiating sale agreements with buyers, handling escrow arrangements, and ensuring smooth transfer of ownership. The value of specialized search fund counsel cannot be overstated. Generalist lawyers unfamiliar with the model may structure deals inefficiently, miss market-standard terms, or create unnecessary complexity. Specialized firms like Spark Avocats in France have developed template agreements and know-how that reduce costs and timelines. They understand investor expectations, can benchmark terms against market norms, and anticipate issues before they arise. The cost of legal services varies but typically ranges from €30,000-€80,000 for a complete acquisition depending on complexity. While expensive, proper legal structuring prevents far costlier disputes, litigation, or deal failures. Many search fund investors have preferred legal advisors they recommend, creating network effects where experienced counsel become trusted participants in the ecosystem.