An independent sponsor raises equity one deal at a time and may or may not run the company it buys. A search fund raises money to find one company, which the searcher then runs as CEO. Sponsors usually buy larger companies and earn fees on each deal. Both raise most of the money for the purchase after they find a company, so check where it will come from before you send the confidential information memorandum (CIM).
How the two buyers compare
| Question | Independent sponsor | Search fund |
|---|---|---|
| Where the equity comes from | Wealthy individuals and family offices, raised for each deal | Mostly the investors who paid for the search |
| Who runs the company after the purchase | The sponsor, a CEO it hires, or the current team | The searcher, as CEO |
| Typical size | Most surveyed deals $10M to $75M of enterprise value | Median price of $16M in 2024–25 |
| How the buyer is paid | Closing fee, management fee, and carried interest | Up to about 25% of the common equity, earned over time |
| How fast they buy | Many advisors see sponsors as slower than PE | One search, about 20 months to a deal |
| Buying criteria posted on PrivSource | Median range $1M to $5.5M of EBITDA | Median range $1M to $5M of EBITDA |
The sections below link to each source. The PrivSource figures use the buying criteria that were active in November 2026.
Where does the money come from?
A sponsor puts together a new group of investors for each deal. Axial's 2026 sponsor report found that 81.7% of sponsors raise equity from wealthy individuals and 79.6% from family offices.
A search fund first raises a small amount to pay for the search itself. When the searcher signs a letter of intent to buy a company, the same investors decide whether to put up the money for the purchase. The Stanford GSB 2026 Search Fund Study reports that 58% of search funds since 1996 have bought a company.
Who runs the company after the purchase?
A searcher always does. That is the whole idea of a search fund: one person buys one company and becomes its CEO.
Sponsors differ. Some keep the owner's team in place and sit on the board, and others run the company themselves. In Axial's report, 39% of sponsors said hands-on experience running companies is what sets them apart. Ask each sponsor which kind it is, because your seller will ask you.
How big are the deals, and how is each buyer paid?
Sponsors buy larger companies. A 2022 McGuireWoods survey found that more than 75% of sponsor deals had an enterprise value of $10 million to $75 million. Stanford puts the median search fund purchase price at $16 million for 2024–25.
A sponsor is paid out of the deal. Citrin Cooperman's 2025 report found that a 2% closing fee was typical for 56% of the sponsors who answered. Most sponsors who charge a management fee based on EBITDA charge 5%. For 64% of sponsors, carried interest can reach 25% or more.
A searcher is paid in equity instead. A Yale case describes the usual structure. The searcher earns up to 25% of the common equity in three equal parts: one when the company is bought, one over time, and one when the investors reach set returns.
Which one closes faster?
Neither one is a sure thing. In Axial's survey, 55.7% of advisors said sponsors take longer to close than PE firms. That share fell 17 percentage points from 2025, and 74.3% of sponsors now provide a letter from their investors backing the deal before they sign a letter of intent.
A searcher has one search and one deal to make. Stanford says buying a company typically takes about 20 months. A searcher who is far into that time is eager to buy, but the investors still have to approve your deal.
How do their sizes compare on PrivSource?
Their size ranges overlap more than you might expect. On PrivSource, a mandate is a buyer's written description of the companies it wants to buy. In November 2026, the median independent sponsor mandate covered $1 million to $5.5 million of EBITDA, and the median search fund mandate covered $1 million to $5 million. Sponsors had posted about twice as many mandates as search funds.
The difference shows at the top. A business with $5 million of EBITDA falls inside about twice as many sponsor mandates as search fund mandates. At $1 million of EBITDA the gap is smaller, about five sponsor mandates for every three from search funds.
What to ask before you send a CIM
Ask an independent sponsor these four questions:
- Who is your equity partner on this deal, and will they send a support letter now?
- Which deals like this have you or that partner closed?
- Who will run the company after you buy it?
- What closing fee and management fee will the company pay?
Ask a searcher these four:
- Who are your search investors, and have they funded a deal this size?
- How many months of search money do you have left?
- What have you run before, and why this business?
- Which lender have you spoken to, and for what amount?
If a buyer answers all four in writing, send the CIM the same day. To find both kinds of buyer, read how brokers reach independent sponsors and search funds. For how sponsors find their deals, see our independent sponsor deal sourcing report.
Where PrivSource fits
AI Buyer List shows you the sponsors and searchers who match your deal, with the reason each one would buy. Some have told PrivSource what they want to buy. Others match because of the criteria they publish, the companies they have bought before, or the kind of business they run. You choose who receives the deal, and it is free for advisors.
