Search Fund Returns: The 2026 Stanford Study
The Numbers
862
Core funds tracked since 1984, roughly 99% of all known US and Canada search funds
33.9%
Aggregate pre-tax IRR across every fund in the study
4.75x
Aggregate pre-tax return on invested capital (ROI)
39.3% / 5.98x
IRR and ROI for funds that acquired a company and exited it
~48%
Share of concluded 2021 to 2024 funds that acquired a company, down from 58% for every concluded fund
~2.88x
What search funds returned versus the S&P 500 over the same holding periods (public-market equivalent)
The Power Law
The averages are real, but a handful of outliers drive them, and the useful read is in the distribution. Remove the funds that returned 10x or more and the aggregate drops from 4.75x to about 2.8x ROI, and from 33.9% to roughly 27% IRR. Strip out just the top 10% of funds by return and it falls further, to about 2.1x and 20%. A spectacular fund is what moves the aggregate, and most do far less: 58% of concluded funds acquired a company and 74% of those reported a gain, so fewer than half of all concluded funds did. Size your own expectations against that, and treat the headline multiple as the weight of a few outliers, not the base case.
The Forecast
Jeff Stevens and A. J. Wasserstein predicted in a 2023 Yale case that these returns would fall, and they named the mechanisms rather than only the direction. Fundless sponsors, family offices and private equity now chase the same $1M to $3M EBITDA businesses searchers do. More capital is arriving than there is top-decile talent to absorb it, which moves terms toward the searcher and away from the investor. Portfolios have grown large enough that some deals get funded which should not, and CEOs get less board attention as backers spread thinner. Newer investors, family offices among them, will accept high-teens returns that earlier backers refused. They put the floor in the low to mid twenties, still above larger private equity because these deals carry more risk. The aggregate above sits clear of that floor, so this is a forecast to re-check each edition, not a description of today.
Method & Source
Figures are from the 2026 Stanford Search Fund Study: Selected Observations, Stanford Graduate School of Business, tracking 862 core funds launched since 1984. Returns are pre-tax and aggregate across funds; individual outcomes vary widely, as the distribution above shows. Whether the model fits you is a separate question from what it has returned; the Path Quiz and Investors speak to that.