The session unpicks how search funds work, how Triple Point is approaching them and why this model is gaining attention.

Triple Point has found that search funds are an increasingly trending investment vehicle, particularly among young professionals with limited resources, through which an entrepreneur raises funds from investors in order to acquire a company.

See the full Q&A below.

As the European market for entrepreneurial acquisitions matures, search funds — long a fixture in the US and Spain — are starting to gain traction in the UK.

A search fund is a vehicle created by an entrepreneur to acquire and operate an existing business, rather than starting one from scratch.

Traditionally, search funds raise capital upfront from investors, typically in exchange for equity, to finance the search process itself.

This model has historically relied heavily on equity investment to fund the acquisition of a target company.

However, a new trend is emerging where private credit, or debt financing, is playing an increasingly significant role in these deals.

Q: Let’s start with the basics. What is a search fund, and how does it differ from other private equity models?

Ben: A search fund is essentially a vehicle created by an entrepreneur — often with an MBA and prior professional experience — who wants to acquire and operate an existing SME business, rather than starting a company from scratch. The typical targets are businesses with retiring owners who may not have a clear succession plan and fall below the radar of traditional financial or strategic buyers.

There are two main paths: the traditional search fund model, where capital is raised upfront from investors to fund the search process, and the self-funded or “independent sponsor” route, where the entrepreneur shoulders the upfront costs and only raises capital once a target is found. I pursued the latter.

Q: And Arnica, from Triple Point’s side—what does your involvement look like in these kinds of deals?

Arnica: We're primarily a lender, so we’re providing debt financing to the acquisition vehicle. From our perspective, it’s comparable to lending to a management buyout —except the “management” is the entrepreneur stepping into the business. It’s a well-equitised, single-asset buy-in.

Roughly 10% of our SME lending activity over the last year has involved search funds. It’s still early days for us in the space, and part of our focus is building internal education and track record. The model works well when the right individual is at the helm, and that’s where we spend most of our due diligence effort — on the person, not just the business.

Q: What makes an entrepreneur "the right individual"?

Arnica: It’s about more than academic pedigree or professional background. We want to know if the person can actually run the business — can they lead teams, manage people, handle uncertainty? For us, 80% of the decision is about the individual. With a private equity sponsor, you’re backing an institution. Here, you’re backing one person.

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Q: What kind of businesses are typically targeted by search funds?

Arnica: We look for businesses with stable, recurring revenues — contracted income, good visibility on cash flow. That usually means healthcare services, tech-enabled services, and certain B2B verticals. The key is that we’re not chasing sector-specific plays; we’re assessing revenue durability and operational risk.

Ben’s acquisition, for instance, was a digital service company in the musculoskeletal and physiotherapy space, which had strong recurring revenue and a clear growth trajectory.

Q: Ben, can you walk us through your process and how the partnership with Triple Point came about?

Ben: I met the founder of the business I acquired in late 2023. After several months of building rapport and alignment on vision, I sent an LOI around March. That’s when I started fundraising. I’d raised equity before, but debt was a new frontier for me.

Triple Point came highly recommended, and what stood out was their attitude. Unlike some lenders who focus on risk from the first call, Triple Point was positive and solution-oriented from day one. They understood the deal, liked the business, and were efficient. The terms we initially discussed remained consistent through closing, which made a big difference.

Q: From a risk perspective, how does Triple Point structure these deals compared to traditional SME lending?

Arnica: The core lending terms — LTV, interest rates — are not drastically different. We typically require a 1:1 debt-to-equity ratio at a minimum, whereas we would be more flexible on a private equity deal. The main difference is in the diligence. We’ll go further into referencing the individual, often speaking directly to their equity backers to understand why they’re being supported.

Since these are often single-company transactions, we’re cautious about the transaction risk meaning the loans are generally more weighted towards amortising than interest only, so we can have an element of de-leveraging, at least early on.

Q: Is there much competition in the UK market for lending into search fund deals?

Arnica: It’s still fairly niche. You might see a few names like ThinCats or Shawbrook, but high street banks aren’t playing in this space due to the perceived risk. Some family offices have started providing both equity and debt, especially in sectors where traditional lenders are more cautious.

Ben: Some smaller lenders or hybrid funds do offer creative structures — mixes of debt and equity, board seats, etc. — but Triple Point stood out for their clarity and professionalism. No surprises.

Q: Spain is often cited as a leader in European search funds. Why is that?

Ben: The SME market in Spain is more fragmented, which creates more acquisition opportunities at the right scale. There’s also been a virtuous cycle of early search fund successes — entrepreneurs exiting and reinvesting as backers — which helped grow the ecosystem. Cultural and generational factors around succession also play a role.

Q: What’s next for Triple Point in this space? Do you expect to do more search fund deals?

Arnica: If we continue to see strong individuals and good businesses, then yes. The more success stories we have, the easier it is to bring these deals through our investment committee. It’s still a small portion of what we do — about 10% — but that could grow. The deal flow is there. It’s just about doing the right ones.