In 2021, former New Orleanian Rachel McGrath knew she wanted to be her own boss, but she didn’t want to start her own company.
So she became a “searcher” instead.
McGrath accepted an invite into a program run by the New Orleans-based firm Search Fund Accelerator, which paid her a salary and covered her expenses during a yearlong hunt for a business to buy. The firm coached her through the acquisition process and fronted the money to make the deal.
The result? Since 2023, McGrath has been the CEO and part-owner of a specialty chemicals company in a small town in Pennsylvania, and she’s already grown the business by acquiring a Florida-based competitor.
McGrath, who first moved to New Orleans in 2013 to work for Chevron, said the search fund financing model — where investors gamble on promising entrepreneurs’ ability to find and run profitable businesses — was a great fit for her.
“Buying a company wasn’t on my radar until an oil and gas engineer like me came to one of my MBA classes and talked about doing it,” said McGrath, who has degrees from MIT and Harvard’s business school. “People don’t want to sell to some private equity guy in a sweater vest, and it’s a lot easier to convince them if you’ve had a real job.”
McGrath isn’t the only one who believes she has what it takes to run a company and is looking for innovative ways to make it happen.
Though search funds trace their roots back to Stanford University in the 1980s, the financing model has exploded in popularity this decade as classes on the topic have proliferated at the nation’s top business schools and a robust ecosystem supporting entrepreneurship through acquisition has developed outside of academia.
There are nearly 900 funds supporting searchers in North America, according to a new Stanford report. And more than 100 of those have launched in the last three years as private equity firms with money to spend look for new ways to buy into main street businesses.
Rachel McGrath
Provided photo
Search Fund Accelerator, founded in 2015, is a pioneer in the industry, bolting together a network of investors with intensive, hands-on coaching. The firm’s headquarters is in New Orleans because its founder, Tim Bovard, married a local a decade ago and moved his operation to town from its former home in Boston.
Though located far from the nation’s private equity hotspots, Search Fund Accelerator was recently featured in a Wall Street Journal article as it has built a portfolio of 19 ventures, including two worth over $100 million — and its current batch of searchers hopes to add to that number.
“There are a lot of younger people who want to run a business,” Bovard said. “They can either launch a startup, where the probability of failure is 90%, or there’s entrepreneurship by acquisition, where you buy a business from a retiring owner or someone who wants to transition out. It’s a pretty compelling proposition.”
Needle in a haystack
There are multiple ways to buy a small business.
Some entrepreneurs save or raise enough money for a down payment and apply to borrow the rest from the U.S. Small Business Administration. Others turn to family or friends. And a third category, the searchers, seeks investment from a group of traditional search funds that follow practices that have coalesced since the model was pioneered by Stanford professor Irving Grousbeck and other industry icons.
Searchers usually pitch many funds in the hopes of raising money from about a dozen of them to cover two years of salary, rent, data costs and travel related to a search. If the process uncovers a viable company, searchers go back to the funds to ask for the cash to buy it in exchange for a major stake in the venture.
Timothy Bovard
Funds usually take 70% to 75% ownership, and a searcher becomes the company’s new CEO, unlocking levels of ownership by meeting predetermined milestones.
Bovard’s Search Fund Accelerator goes a step further, providing office space, training, data, mentoring and feedback to members of each year’s cohort. The firm helps them write letters of intent, negotiate acquisitions and acquire bank financing. It provides all the capital required to make a purchase, negating the need for entrepreneurs to cobble together investments from multiple sources.
The only catch? Search Fund Accelerator is highly selective, choosing only a handful of candidates out of hundreds of applicants each year.
Bovard said the key to success is pairing these hand-picked entrepreneurs with businesses boasting recurring revenue, low ongoing capital investment needs and a national market.
Not every hotshot MBA grad has the requisite real-world experience and willingness to “jump into the void,” he said.
Successes from previous Search Fund Accelerator cohorts include a psychologist and former U.S. Army officer who purchased and grew a behavioral health business in Arizona, an engineer who bought a pump repair company in Houston and more than doubled its annual revenue, and an entrepreneur who bought and sold an Arabi-based elevator service company.
In all, the firm and its searchers have made 27 acquisitions.
Guillermo Ochoa poses for a photograph at his office in New Orleans, Wednesday, Aug. 5, 2026.
STAFF PHOTO BY ENAN CHEDIAK
Guillermo Ochoa, a native of Mexico City who is working out of Search Fund Accelerator’s New Orleans office this year, hopes to add another one to the list.
The mechanical engineer moved to Los Angeles in 2018 while working for Bimbo, the massive global commercial bakery. In his off-hours, he earned his MBA from UCLA, where a search fund class changed his career’s trajectory.
“It was one of those moments when things clicked,” he said. “I didn’t have the background to launch a startup, but I always wanted to have my own business.”
After earning his degree, Ochoa considered buying a company on his own with help from an SBA loan or investors. In the end, though, he chose to partner with Search Fund Accelerator.
He set his sights on manufacturing and industrial services companies nationwide and entered into negotiations with about eight of them, from hot sauce manufacturers to makers of plastic car parts.
Earlier this summer, he signed a letter of intent to make a purchase. He’s doing due diligence that could lead to a closing in October.
“I hope it works out,” he said. “It will be nice to stop cold calling people and start running a business.”
Interest in search funds is growing
One of the factors fueling the growth of search funds is the “silver tsunami” of baby boomers approaching retirement age, meaning more than 1 million businesses may hit the market between now and 2035.
“A few of the retirees just want to get the biggest payday they can get, but the vast majority of them care about who’s going to take over their baby,” Bovard said. “They’re looking for a younger version of themselves if they don’t have a child who wants to take over.”
But as the number of searchers grows, so does the industry’s failure rate, which hovers around 50% — although Bovard said his firm’s is closer to 20%.
“A lot of the people who are going into this are probably perceived by sellers as too young with backgrounds too focused on consulting, investment banking or private equity,” he said. “Those are wonderful CVs coming out of an MBA program, but do they know how to run an elevator company?”
The rising popularity of social media influencers promoting the benefits of buying businesses has also created more searchers, as has Harvard’s well-attended annual conference focused on “entrepreneurship through acquisition.”
It all adds up to a process that McGrath said looks different from five years ago.
“When I was searching, we were Googling and emailing people before making a connection and eventually visiting strong leads,” she said. “But the increased volume of emails and new filters have made it harder to get through.”
She said today’s searchers are relying more on business brokers, trade shows visits and other creative measures to raise their profile. Some are starting their own podcasts to get attention.
Les Alexander, a New Orleans native who teaches at the University of Virginia’s business school, said things won’t be slowing down any time soon.
“I think this trend is going to continue at least for the next five years,” he said. “The rate of return for investors in this space is almost 34%, and for every dollar investors are putting in they are getting nearly five back. You can’t get that from any other asset class I’m aware of.”