The number people quote is 35.1% IRR. That comes from Stanford GSB's 2024 Search Fund Study, the authoritative biennial survey of every known core search fund in the U.S. and Canada since 1984. 681 funds. Four decades of data. IRR of 35.1% and a 4.5x return on investment.
Those are real numbers from real transactions. They are also aggregate numbers. And aggregate numbers hide a lot.
Here is what the data actually shows, and what it does not show, before you build a thesis around it.
The Stanford benchmark, unpacked
The 2024 study covers 681 search funds formed in the U.S. and Canada since 1984. Stanford calculates returns to original investors across both the search phase and any acquisition, from fund inception through December 31, 2023.
The headline: IRR of 35.1%, ROI of 4.5x across all funds. That includes failed searches, operators who never closed a deal, and companies still in the hold period. It is a population-level number, not a cherry-picked sample.
Exited funds performed better. The IRR for companies that have already sold climbed to 42.9% in the 2024 study, up from 36.8% in 2022. Several exits in 2022 and 2023 drove strong returns in that cohort.
One more number worth holding: 11% of companies achieved greater than 10x return. That tail performance matters for IRR math. Exclude the top three to five performers, and the aggregate IRR compresses meaningfully.
What happened in 2023
Record formation. 94 core search funds launched in 2023, the highest number in the study's history. More searchers, more business school programs, more investor interest.
Acquisitions did not keep pace. Only 29 companies were acquired in 2023. That is a meaningful gap. More searchers competing for the same pool of acquisition targets creates pressure on deal quality and purchase price.
Investor capital deployed in 2022 and 2023 combined: $682 million, down $94 million from the prior two-year period. Capital is flowing in, but at a measured pace relative to the surge in searchers.
The 2017-2020 acquisition cohort continues to perform well, with more than 50% IRR as exits accumulate. The 2021-2022 cohort shows IRR of 23% and ROI of 1.5x, early in the hold period with considerable room to develop.
The real-world gap
In 2025, Yale School of Management published an independent analysis of actual investor portfolios. The dataset covered 12 investors representing 23 funds and 1,192 individual investment decisions.
Their findings differ from Stanford's. Mean MOIC including broken searches: 2.0x. Excluding broken searches: 2.78x. Weighted average MOIC across all investors: 2.50x. These are gross numbers. LP returns net of GP fees and carry would be lower.
Stanford reports 4.5x. Yale's real-world sample shows 2.5x. Both are gross. The gap exists partly because Stanford calculates returns using entrepreneur-reported equity valuations for companies still operating, while Yale uses actual LP outcomes across resolved positions.
Neither dataset is wrong. They measure different things. Stanford captures the full population of search fund outcomes as reported by operators. Yale captures what a specific group of investors actually received on capital deployed.
The practical read: if you are an LP underwriting a search fund portfolio, 2x to 3x gross MOIC is a more defensible planning assumption than 4.5x, unless you have strong evidence of selection skill.
Solo versus partnered
The 2024 study breaks out returns by partnership structure. Partnered searches show IRR of 40.5%. Solo searches show 30.3%.
That looks like a clear argument for partnering. It is not that simple. Five of the six searchers who achieved 10x-plus ROI in the last two years were solo operators. The distribution matters as much as the average.
Partnered searches represented 19% of launches in 2022-2023, down from 41% in the prior period. That shift may reflect the economics: two salaries during the search phase, two equity stakes at acquisition. For a smaller business, that math gets tight.
International context
IESE Business School tracks search funds outside the U.S. and Canada in collaboration with Stanford. The 2024 international report covers 320 funds across 40 countries. International IRR: 18.1%. International ROI: 2.0x.
The model works internationally, but performance trails the U.S. benchmark. Exits are limited: only 21 international exits on record, with 62% of acquisitions occurring since 2020. It is genuinely early.
What drives the outliers
The 11% that hit 10x-plus returns share common characteristics, though the study does not quantify each factor individually. Based on the data pattern across cohorts:
- They acquired businesses with recurring revenue or defensible market position, not turnarounds.
- They held for the full five-to-ten-year window, resisting early exit pressure.
- They focused on operational execution in years one through three before pursuing growth.
- They entered at reasonable multiples, typically 4x to 8x EBITDA on sub-$20M purchase prices.
Median purchase price in the 2024 study: $14.4 million at 7.0x EBITDA. EBITDA margin at acquisition: 27%. Growth rate at acquisition: 25%. Average employees: 34.
That profile is a profitable, stable, lower-middle-market business. Not a distressed turnaround. Not a high-growth tech startup. A business that already works, led by someone who is ready to exit.
What this means for PGC's model
Patriot Growth Capital operates in the same target zone as the Stanford median: sub-$20 million enterprise value, businesses with strong fundamentals, founders who want a qualified buyer with operating capability. We source deals where the operator and the business are ready, not where we need to be right about a turnaround.
The veteran operator pipeline matters here. Military-trained operators bring process discipline and stress-tested decision making to the CEO seat. That is not marketing language. It is the variable that determines whether a technically sound acquisition becomes a 2x outcome or a 10x outcome.
If you want to understand how search fund economics work at the deal level, read our piece on how search funds work. If you are looking at the capital structure side, the LBO model breakdown covers the mechanics.
The honest take
35.1% IRR is a real number from a credible source. It is also a population average built on four decades of data, including several extraordinary outliers.
Real LP portfolios in the Yale dataset delivered 2.5x gross MOIC. That still compares favorably to private equity benchmarks across the same period. It does not compare favorably to what the headline number implies.
The search fund asset class works. The returns are real. But the distribution is wide. Selection matters. Operator quality matters. Entry multiple matters. Hold period discipline matters.
Anyone telling you this is passive is either uninformed or selling something. The 35.1% goes to the people who do the work.
Frequently Asked Questions
What is the average IRR for search funds according to the Stanford study?
The 2024 Stanford Search Fund Study reports an aggregate IRR of 35.1% across 681 search funds formed in the U.S. and Canada since 1984. Exited funds show an IRR of 42.9%. These are gross returns calculated from the perspective of original investors across both the search and acquisition phases.
How do real investor returns compare to the Stanford benchmark?
A 2025 Yale School of Management study analyzed actual LP portfolios across 23 funds and found a weighted average gross MOIC of 2.50x, compared to Stanford's reported 4.5x. Both are gross figures. The gap exists because Stanford uses entrepreneur-reported valuations for operating companies while the Yale data reflects resolved LP outcomes.
How many search funds were launched in 2023?
94 core search funds launched in 2023, a record number. Only 29 acquisitions were completed that year, reflecting increased competition for acquisition targets among a growing pool of searchers.
Do partnered search funds outperform solo funds?
On average, yes. The Stanford 2024 study shows partnered searches with an IRR of 40.5% versus 30.3% for solo searches. However, five of the six operators who achieved 10x-plus returns in 2022-2023 were solo searchers. The average favors partnership; the outlier performance skews toward solo operators.
