Path Economics
What Each Path Pays
Self-funded, investor-backed and employed search pay differently, and the difference is not a preference. Set the deal you are aiming at and the three columns price the same outcome under each set of terms.
The Three Paths
- Self-Funded
- The most ownership and the most risk, concentrated in you.
- Traditional (Investor-Backed)
- A backer and a salary in exchange for a minority of a larger company.
- Employed (Salary Model)
- The most security and the least equity: a paycheck and a built-in backer.
Deal size this path buys
- Self-Funded
- Usually $1,500,000 to $5,000,000, which the price modeled here falls inside.
- Traditional
- Usually $5,000,000 to $50,000,000. The price modeled here sits below that, so this path would be an unusual fit for it.
- Employed
- Usually $5,000,000 to $50,000,000. The price modeled here sits below that, so this path would be an unusual fit for it.
Your capital
- Self-Funded
- About $400,000 (a 10% equity injection), or as little as $200,000 in cash if a seller note on full standby covers half
- Traditional
- None required: investors fund both the search and the acquisition
- Employed
- None: the firm funds the search
What you owe monthly
- Self-Funded
- About $45,603 a month on a $3,600,000 loan at 9% over 10 years, so the business has to clear about $57,004 a month after paying you to satisfy a lender at 1.25x coverage
- Traditional
- Whatever the deal's own structure carries, none of it personally guaranteed by you
- Employed
- None of it yours: the firm's balance sheet carries the deal
Income while searching
- Self-Funded
- None while you search: you fund your own hunt
- Traditional
- A modest stipend your investors fund while you search
- Employed
- A salary from the firm while you search
Equity you end with
- Self-Funded
- Most or all of the company, 90 to 100 percent as this comparison counts it; any minority co-investors take a slice
- Traditional
- Typically around 20 to 30 percent, earned in thirds (on raising, on acquiring, on performance)
- Employed
- Up to roughly 20 to 25 percent, vesting over time
Size against the stake
- Self-Funded
- Nothing has to make up for a stake you kept. What limits this path is the price your own cash and a single SBA loan can reach, not the share at the end of it.
- Traditional
- Taking 20 to 30 percent instead of the whole company means the deal has to be about 3x to 5x bigger before your stake is worth more. This path buys 3.3x the size at the bottom of its range and 10x at the top, so at the small end you would need 27 to 30 percent to break even against owning a self-funded deal outright, which is the top of the 20 to 30 percent it pays. At the small end of the range only the top of that band is worth taking.
- Employed
- Taking 20 to 25 percent instead of the whole company means the deal has to be about 3.6x to 5x bigger before your stake is worth more. This path buys 3.3x the size at the bottom of its range and 10x at the top, so at the small end you would need 27 to 30 percent to break even against owning a self-funded deal outright, which is more than this path pays. On equity alone the bottom of this range is worse than a smaller deal you own; the salary and the absent guarantee are what you take instead.
Personal guarantee
- Self-Funded
- Yes: you personally guarantee the SBA loan
- Traditional
- Usually none: the structure is institutional
- Employed
- None
Control
- Self-Funded
- Full, from day one: you own it and run it
- Traditional
- Shared with a board of your investors
- Employed
- Within the firm's structure and mandate
If the search fails
- Self-Funded
- You absorb the lost runway yourself: no backer funded the months you spent, and the income you gave up is gone
- Traditional
- Your investors funded the search, so the money spent was theirs; you rebuild the time and the raise, not your savings
- Employed
- You were on salary throughout and typically return to a role at the firm; the cost is time, not money
Deal sizes are typical ranges, not limits. The paths are priced here at one deal size so the trade can be weighed line by line, but they do not shop in the same aisle. A quarter of a company the size a fund buys is not a quarter of the company modeled above. Median acquisition figures from the Stanford GSB Search Fund Study (2026).
Which Column Is Yours
The columns above price three paths; they do not say which one you are in. That is what Choose Your Path asks, in five questions about cash, income, control and appetite. Take it first if you are still deciding, and come back here to see what the answer costs.
Whether any of the three beats staying where you are is a different question, and Buy vs. a Career prices it: ten years of salary and savings against ten years of owning, the downside of a search that closes nothing included.
A path is also not a start date. Search Readiness checks whether you can begin at all, and SBA Eligibility Pre-Check states the rules that can end the self-funded column before any of these numbers matter.