LenderHawk analysis. Not affiliated with or endorsed by Search Funded: The ETA Podcast.
William Cohn explains how he first got into search fund investing through a friend’s early search in the pre-formalized days of the model, then describes what has and has not worked across a small portfolio of international search investments. He argues that search’s lower-fee structure and direct ownership appeal make it a cleaner alternative to traditional private equity, while emphasizing that investor judgment still hinges on spotting motivation, discipline, and modesty in founders who are only lightly diligenceable early on.
Aspiring searchers, search investors, and MBA students who want to understand how an experienced investor evaluates entrepreneurs, thinks about incentives, and chooses between search, PE, and building a career with more control.
Early search fund investing could start as informal backing of a friend’s salary, then convert into equity after the acquisition closes.
The best-fit search targets, in this guest’s view, are modest legacy businesses that make products people routinely need or want.
International search deals can work, but investor comfort drops sharply when financing norms or seller expectations diverge from the U.S. template.
Two things that matter most in a searcher are motivation and disciplined execution, because the investor often gets only a few conversations before deciding.
A searcher’s search period functions as an extended character test, revealing whether they stay organized and persistent under uncertainty.
Search investing becomes unattractive when founders ask for large salaries and outsized equity before proving they can source and close a deal.
Traditional private equity looks far more fee-heavy than search, and the appeal of search is that returns can accrue without the classic 2-and-20 drag.
Career setbacks can become an advantage when they force an entrepreneur to take control, build a differentiated skill set, and create optionality.
The investor screens searchers through a short set of signals: motivation, intelligence, discipline, organization, articulation, and then a subjective read on whether the person has the stamina to spend years looking and then operate a company.
When to use: Useful during early-stage search fund diligence when hard operating evidence does not yet exist.
Search is framed as a more direct, less fee-laden ownership model than conventional PE, with economics that feel closer to a no-load public fund than to carried-interest-heavy institutional vehicles.
When to use: Useful when comparing ETA capital structures and thinking about LP alignment.
The first search investment backed a friend’s salary for two years before converting into equity after the acquisition.
Bill Cohn described an early, pre-formalized search fund investment made in the 1980s.
The friend bought a tortilla company in Boise, Idaho and operated it for close to 20 years before a sale to affiliates of the Pritzker family.
Cohn used this as the archetypal successful search fund outcome.
The investor has also backed searchers in Europe and Colombia, with the European investments not working out well and the Colombia deal doing okay.
He contrasted cross-border outcomes across a small portfolio of international search deals.
He characterizes the typical search investment as relatively low-stakes because the initial capital mostly covers two years of salary and living expenses.
This was part of his argument that search is a more absorbable loss than many other private markets bets.
He cites Columbia Business School class of 1987 and says the 1987 stock market crash fell 22.6% in one day.
He used this as part of a career narrative about uncertainty and how exogenous shocks shape careers.
He says he worked nearly 20 years on Wall Street as an M&A banker before shifting to writing and investing.
This background was presented as part of his credibility edge in evaluating searchers and businesses.
He says Puck gives journalists equity ownership, which he views as unusually aligned compared with traditional media economics.
He brought this up while discussing ownership and incentives beyond search funds.
Keep upfront compensation requests modest when raising search capital.
Why: Founders have no track record yet, so asking for a large salary and equity package signals misalignment before performance is proven.
Use the search period itself to demonstrate discipline, organization, and stamina.
Why: Investors read the search process as an extended audition for eventual CEO performance.
Stick close to classic, financeable acquisition profiles unless you have a strong reason to deviate.
Why: Off-template businesses and weak financing markets make it much harder to close a viable deal.
Treat the second bite of the apple as a real governance check.
Why: If the searcher finds a business the investor dislikes, the investor can decline to follow on.
Cohn backed a friend’s early search, the friend found and bought a tortilla company in Boise, Idaho, and then moved there with his family to run it. The company was recapitalized once and eventually sold to Pritzker-affiliated buyers after roughly two decades.
Lesson: Long-duration, plain-vanilla businesses can produce strong outcomes when the searcher is credible and the financing is sensible.
Cohn described a situation where a searcher near the end of the search period considered buying a management consulting firm in Mexico. The economics were unattractive, especially because financing would have required roughly 90% equity and the deal felt far outside the normal search-fund playbook.
Lesson: Deadline pressure can push searchers toward businesses that are structurally misaligned with search fund economics.
After being laid off from JPMorgan Chase, he chose to return to writing rather than remain dependent on Wall Street bosses. His first book on Lazard became a bestseller and created a new career built around ownership and control.
Lesson: A forced career disruption can become the catalyst for a better, more autonomous professional path.