If you're new to entrepreneurship through acquisition, the first fork in the road isn't which business to buy. It's which kind of search you're running. Almost everyone in this space falls into one of two camps: the traditional search fund and the self-funded search.
Search funds: other people's capital, a defined process
A traditional search fund raises money from a small group of investors up front, typically enough to cover a 1-2 year search salary and expenses, in exchange for equity in whatever business you eventually buy. When you find a target, the same investors (plus new ones) fund the acquisition itself.
This path gives you a salary while you search, an experienced investor group to lean on, and a well-worn process to follow. The tradeoff is dilution: by the time you close a deal, your personal equity stake is meaningfully smaller than if you'd financed it yourself.
Self-funded search: full ownership, more personal risk
A self-funded searcher covers their own search costs (savings, a part-time job, or a spouse's income) and finances the eventual acquisition with a mix of debt (often an SBA 7(a) loan) and equity, sometimes with a handful of individual investors rather than a fund.
You keep far more of the company, but you also carry more of the risk during the unpaid search phase, and you're assembling your own financing and advisor relationships from scratch rather than inheriting an investor group's playbook.
Which one fits you?
Ask yourself three questions: Can you cover 6-18 months of search costs without a salary? Do you want an investor group's structure and accountability, or full control? And how much ownership dilution are you willing to accept in exchange for that support?
There's no universally right answer. Plenty of successful acquisition entrepreneurs have taken each path. What matters is picking the one that matches your actual financial runway and risk appetite, not the one that sounds more prestigious.