The Search Fund Model Won’t Just Be Imported to Quebec, It Will Be Reinvented Here

On May 8 and 9, I attended INSEAD’s Entrepreneurship Through Acquisition (ETA) conference in Fontainebleau.

With over 600 participants, two lecture halls running simultaneously, and attendees from the United Kingdom, Brazil, Portugal, Mexico, Japan, and Belgium—including MBAs, former consultants, business operators, experienced investors, and people seeking a second career—the event had a rather vibrant atmosphere.

I was already familiar with the search fund model. I’ve been researching the topic for a while, discussing it with several entrepreneurs and investors, and we’re starting to see it gain traction in Quebec. But it’s a completely different experience to spend two days immersed in such a mature ecosystem—and, above all, to feel the energy of an ETA community gathered from all over the world.

For those less familiar with the ETA model, often through the traditional search fund, it’s relatively simple on paper: an entrepreneur raises capital to fund a search period of about 24 months, then acquires a profitable small or medium-sized business, often an “unsexy” company such as a carpet-laying firm, a cardboard box assembly plant, or a door-and-window manufacturer—and takes over its day-to-day management for a few years before exiting with a profit.

The search fund is a high-potential investment vehicle, but it is also an entrepreneurial adventure, risky, demanding, and heavily influenced by its local context.

In fact, ever since I discovered this model, one observation has consistently stood out: the ETA is universal. Statistics on returns, success rates, and financial mechanisms are very similar from one country to another. That said, one thing emerged very clearly from my time in Fontainebleau: even when the numbers are comparable, the implementation, and what the model “looks like”, are deeply local.

Three factors shape the model, giving it a more local flavor.

1. Universities Shape the Ecosystem

Wherever the model has truly taken root, universities have played an immense role—not just as places of learning, but as drivers of the ecosystem.

Stanford, Harvard, IESE, INSEAD.

Often, it all starts with a few passionate professors and committed alumni, followed by the creation of an entire network that ultimately makes the model credible, visible, and accessible.

In the United States, the ETA ecosystem is now very mature. Leading business schools play a central role in its dissemination. According to data presented during the conference, about two-thirds of searchers and investors hold an MBA, nearly half of whom graduated from top business schools. We also learned that about one-third of searchers come from major international consulting firms.

There, the search fund has become a recognized and structured entrepreneurial path.

In Quebec, we’re not quite there yet. First, because we don’t have universities like Stanford, but also because we lack institutions that play a comparable role in promoting the model and fostering the ecosystem.

2. Our economic fabric is different

In Quebec, our economic fabric relies heavily on small and medium-sized enterprises (SMEs) owned by their founders. These are sometimes family-owned businesses, often deeply rooted in their local communities and closely tied to the identity of their founder, who is likely more street-smart than a graduate of a prestigious business school.

In this context, an acquisition cannot be approached as a mere financial transaction.

It’s not just about buying a business. It’s about taking over someone’s life’s work—a business built over 20 or 30 years, with employees going through a major transition, and often a founder who is entrusting a significant part of their life to someone else.

The “right search consultant” in Quebec will likely not be exactly the same as in Boston or San Francisco.

They must be able to earn a founder’s trust before even discussing growth or optimization. In many cases, hands-on expertise and operational credibility will matter more than the prestige of a degree.

3. The investment ecosystem is not at the same stage

In the United States, many searchers can now choose their investors. Capital is abundant, and funds and investors are already very familiar with the model.

In Quebec, there is still a lot of education to be done.

We need to explain how search funds work. We need to explain why the role of the mentor-investor is often just as important as the capital they provide. We need to explain why some of the best targets are intentionally “boring companies”: specialized manufacturers, industrial firms, B2B service providers, or well-established family-owned businesses.

And this is despite impressive historical returns: average IRRs between 25% and 30%, with failure rates significantly lower than those seen in venture capital.

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Entrepreneurship through acquisition is one of the most credible solutions we currently have to the succession challenge facing Quebec SMEs, and it’s also a very concrete way to modernize, professionalize, and ensure the long-term viability of a significant part of our economy.

We are at the very beginning of the “ETA” journey in Quebec, and this gives us the opportunity to shape it so that it works. We still have the chance to reflect on the kind of ecosystem we want to build and, above all, on how we want to support entrepreneurial business succession in Quebec.