Call it ambition with a shortcut: a growing number of would-be CEOs are skipping the slog and acquiring businesses that already exist, earn, and work. All that’s left is to run them better.

Behind this growing trend are search funds. It appeals to those who want to run a company, not build one from scratch. They raise capital, identify a promising small or mid-sized business, and step in. It is a direct path to ownership and leadership.

While the model has long been popular in North America and Europe, it is starting to gain ground in the Middle East. But, the region presents both promise and friction. 

For example, “In Saudi Arabia, the market is vast and largely untapped, with over 1.3 million SMEs,” says Ghassan Ayidh, Founder and Managing Principal of OxMar Partners. “The opportunity lies in this large supply of businesses and the scarce availability of buyers.” But challenges persist. Many business owners in the region are unfamiliar with SME-level M&A, and access to reliable data is limited. “In the US, I could look up a small business’s revenue and size in a centralized database. That infrastructure doesn’t exist here,” adds Ayidh.

Still, others in the region see momentum building. Edmond Husseini, Founder of Gulf Succession has identified three key opportunities. The first, he says, is, “There aren’t many places in the world that are growing as quickly as the Gulf is growing, so that’s an obvious opportunity.”

The second is lower competition. “We’re hearing that in more developed search fund markets, there’s now quite a lot of competition for businesses in the $1 million EBITDA range. I don’t think that is the case over here,” he says.

And the third is timing, particularly in the UAE. “All those entrepreneurs who came here in the 80s, 90s, and 2000s have now been in their businesses for 20 to 30 years, and many of them are approaching retirement age. My thesis is that this is creating a steady stream of businesses,” Husseini says.

“We believe that search funds, and the incredible talents that decide to pursue this path, present a very compelling succession plan for high-quality SMBs — a problem not only present in North America and Europe but also in the Middle East,” he adds.

That early-mover advantage is echoed by Niel Wyma, Co-Founder and Partner at Ambit Partners. “Relative to the number of SMBs in the Middle East, there are very few active search funds, which creates an excellent opportunity for the first handful that decide to launch.” Still, he notes, challenges in any new market include low owner awareness of the model, lack of familiar service providers, and limited access to databases and brokers.

For Salwa Katkhuda, Head of Investments at Yurbi Capital, succession remains a key opportunity. “You have succession issues, expats that have set up in the GCC in the 2000s that are now coming to retirement age. Their kids have graduated, and they’re moving back to their countries. Succession, in general, in other parts of the Middle East is also a very interesting search,” she says.

She also points to a broader shift in the region. “What’s attractive is that there’s a demographic shift. People are moving into this region, and there’s demand for many, many services.”

But there are real obstacles. “Most of these are family businesses, and there’s usually an unusual or unrealistic expectation on valuation, not necessarily always a willing seller. In some cases, there are ownership issues related to locally owned businesses,” she explains. “And unlike Europe or the US, you can’t secure debt or acquisition financing in the same manner.”

THE SCALABILITY FACTOR IN INVESTMENTS

On this point, private equity firms typically have larger teams, and this speaks to a structural difference. Their main expertise is in financial structuring, not operations, believes Adam Giansiracusa, Founder and Managing Partner, Oryx Legacy. 

“They’re generally not geared to take over and operate a company. A private equity firm will usually acquire a business, put in a management team, and then step back,” he explains.

Search funds, however, operate quite differently. The principal running the fund steps in and fully takes over the business. “We’re expected to bring a mix of financial expertise, operational management, and other skill sets that you don’t typically see in a private equity firm. That’s one reason private equity firms don’t target the SME space,” Giansiracusa says.

Another significant factor is structural: the size of transactions private equity firms can justify. Simply put, SME deals are often too small to make financial sense for them.

“A $10 million deal or a $100 million deal typically requires the same amount of time and effort from the firm. However, due to how compensation is structured at a PE firm, it makes far more sense to focus on the $100 million deal. So, why would they waste their time with a smaller deal?”

Giansiracusa elaborates, “If a private equity firm is earning a 2% management fee and 20% carry on a $100 million deal, for the same amount of effort, they would prefer to work on doubling the value of that deal. The management fee is much larger, and the carry is, in theory, significantly more, even if they tripled or quadrupled the value of a $10 million deal. This is why private equity firms can’t pursue SME deals.”

That’s where search funds carve out their niche.

“We can do those smaller deals, and that’s the space we’ve built around,” he says. “We don’t have a large team; we have a single person who takes management control. So we’re not supporting as many people. And with how compensation is structured for us, a $10 million deal is viable.”

Also, for a private equity firm, the cost and amount of due diligence required is the same for a small deal versus a larger one, adds Husseini. Smaller companies are typically riskier than their larger equivalents, another reason private equity players favor bigger deals.

That said, in more developed markets, such as the UK, PE firms often compete with searchers for search fund deals. “They are starting to move down the market a little bit, and there is increasing competition between search funds and private equity,” he says.

Search funds are now buying bigger. From the perspective of a business owner, especially one nearing retirement, a search fund buyer can offer a key advantage.

“A private equity buyer will typically require the business owner or existing management team to stay in place for a certain number of years,” he says. “They’ll buy, let’s say, 51% of the business, take control, and leave the existing owners with 49%, but still require them to continue running the business.”

A search fund buyer, on the other hand, usually acquires the entire business, giving the owner an exit, and the freedom to retire or move on. 

Even when size isn’t the priority, search funds offer a distinct alternative to private equity or strategic buyers. Thanks to the incoming CEO, they allow for a full exit upfront without requiring the seller to stay on for years. Unlike other models, search funds focus entirely on a single acquisition, ensuring dedicated attention and continuity.

 “This makes the transition much more personal and bespoke,” says Wyma.

A BUSINESS LEGACY

Making a search fund work and closing a deal is fundamentally about building trust with the seller. “It’s about showing them that we’re there to help, offering an exit option that preserves what they’ve built while supporting its long-term growth,” Giansiracusa says. “Many sellers have obligations, stature, and recognition in their communities for what they’ve created. As a search fund, we aim to build on that legacy, not disrupt it. At the heart of it all is establishing a good relationship and rapport with the seller, something that holds true in markets around the world.”

For Katkhuda, this was a key challenge. “Owner skepticism, especially in family-owned businesses, comes up, not just for search funds, but even in corporate M&A,” he says. “It’s the one hurdle that really needs to be addressed. Many investors in the Middle East prioritize large and fast exits.”

Husseini adds that a searcher can build credibility through open conversations and face-to-face meetings. 

Another factor, he adds, is the presence of strong local partners. “I’m transparent about who my shareholders and partners are. When owners see a mix of international and local investors, prominent businesspeople, and family offices, they tend to take me seriously.”

Wyma adds that seller skepticism can be hard to overcome in new markets, but emphasizes that the model is neither new nor untested. “ Large international data sets show that over a thousand search funds have been raised globally since the 1980s, with nearly 500 acquisitions completed,” he says. “This form of succession planning and transitioning a business owner’s legacy works.”

CAN SEARCH FUNDS ATTRACT BIG INVESTORS?

Investing in search funds isn’t about picking one winner. It’s about building a portfolio. “On average, only two-thirds of searchers end up acquiring a company,” says Ayidh. “To secure around 12 acquisitions, you’d need to invest in roughly 36 search funds, assuming you participate in half the deals that come through.” In other words, successful investing in this space requires diversification, patience, and a commitment to building a carefully curated portfolio.

However, for search funds to gain traction with institutional investors in the Middle East, a shift in mindset may be needed. Many regional investors continue to favor large deals and fast exits, which doesn’t align with the search fund model.

Wyma notes that quick exits are rare and unlikely to become a defining feature of search fund investing. “We’re supporting first-time CEOs in acquiring companies that are often too small or underdeveloped to go public or attract private equity interest,” he explains. “These businesses are illiquid, and we hold them until there’s a compelling reason to sell. The real value comes from giving the CEO time to take the reins, implement changes gradually, and invest in long-term growth.

“Most family offices enter this space either through dedicated funds of search fund managers or via select local deals where they can be hands-on, or sometimes both,” says Wyma. “The industry will eventually scale to a point where institutional investors can play a bigger role, but structural barriers still make it difficult to deploy large sums quickly.”

According to Giansiracusa, roughly $3 billion has been invested in search funds and their acquired companies over the past 40 years. “That’s smaller than some individual buyout deals. Even the recent Adnoc Pipelines deal was larger. So, in the grand scheme, it’s still a relatively small space.”

Still, he remains optimistic. “Search funds will continue to grow, especially as more generational transitions unfold. The global search ecosystem has expanded rapidly, and as more small funds are created, we’re seeing growing interest from aspiring searchers. It creates a kind of flywheel effect. I’ve been contacted by many prospective searchers interested in the Middle East, there’s definitely regional interest.”

But two things, he says, need to change to accelerate growth. First, SMEs need easier access to financing. “Second, we need a success story. Once we see someone close and grow a deal here, it will create confidence in the model.”

Husseini agrees that the market is in its early days. “We’ve seen three search funds set up, two in the UAE and one in Saudi Arabia, and that’s a promising start,” he says. “But now, we need acquisitions. And eventually, we need to see exits. That’s when larger institutional investors will start to pay attention.” 

THE ANATOMY OF A GOOD SEARCH FUND DEAL

 Katkhuda says, “If even one searcher exits with strong returns, people will take notice. Right now, large exits and quick sales aren’t the norm here.” 

She adds that a more institutional, long-term approach like the US and Europe is beginning to emerge in the Middle East.

Search funds generally seek businesses with stable, recurring revenue, and in this region, many sectors are still driven by consumption and trade, says Giansiracusa. He emphasizes aligning acquisitions with the long-term growth trajectory of the region. “The key question is: what can you acquire that fits the broader regional development story but also meets the core criteria of a search fund recurring revenue, stability, and scalability? Sector-agnosticism is important.”

Wyma adds that while individual investors and funds may have varying criteria, the fundamentals of a strong search fund deal remain consistent. “The tried and tested recipe includes a focus on growing, fragmented industries with strong organic growth potential and consolidation opportunities,” he says. “Look for businesses with high-quality, mostly B2B recurring revenue, low customer concentration, strong profitability, and capital efficiency.”

But above all, he notes, “It comes down to the quality of the searcher CEO—someone exceptional backed by a strong board. That combination is what drives long-term success.”

IS INVESTOR APPETITE STRONG ENOUGH?

Investor interest isn’t the limiting factor for the search fund model in the Middle East. “There’s already enough appetite from the international search fund community to support a regional ecosystem,” says Husseini. In fact, all the current search funds operating in the region are backed by international rather than local investors.

The real challenge, he explains, lies in the availability of high-quality small and medium-sized enterprises that are viable acquisition targets. “How deep is that pool of SMEs? That remains to be seen.” Other hurdles include limited access to debt financing and the need for fair, reasonable valuations.

Ayidh adds that while interest is growing, search funds must overcome two key challenges: the model is still relatively untested in the region, and they’re competing with booming real estate markets, especially in Saudi Arabia, which many investors view as safer and more familiar. “As real estate returns stabilize and revert to historical norms, investor appetite is expected to shift toward SMEs, offering stronger diversification and long-term growth.”

According to Giansiracusa, there’s growing interest from both local and international investors. “Most of my local investor base includes family offices or individuals already exposed to the model globally. Institutional interest, however, is still limited.”

The real inflection point, he says, will come when the region sees more successful deals. “Once we have a few clear wins, we’ll see more local capital entering the space.”