Since then, entrepreneur Jason Jackson—Unified Dental Care’s former CEO—has established himself as one of the country’s most successful entrepreneurs. Now, after successfully using a search fund to acquire and grow his business, he’s prepared to share what he learned. This innovative financial tool allows individuals, known as “searchers,” to raise capital from investors to purchase and manage small or medium-sized private companies. The goal is clear: grow these businesses and eventually sell them at a profit, often to private equity firms.
That experience pushed Jackson, in 2015 with business partner Olaide Lawal, to start their own search fund. In 2023, this investment mechanism was hugely popular. A year when a record number of these search funds launched—more than 260 across the U.S. and Canada, according to a study released earlier this year by Stanford’s Graduate School of Business. The report documented 94 specialized core search funds started in these areas alone in that cycle year.
Jackson’s journey was not without challenges. Now, just two weeks into his new position at Unified Dental Care, he uncovered fraud on the part of UDC. The seller had baked in multi-million dollar revenues upon exit! Despite this setback, Jackson successfully expanded the business to seven locations before selling it to a strategic buyer in 2023.
Jon Staenberg is the founder and CEO of Agate Hound Fund. He advocates fervently on behalf of the search fund model as an inspiring and impactful avenue for aspiring entrepreneurs to realize their dreams of business ownership. Staenberg articulated the appeal of search funds, explaining how they provide “a risk-adjusted path for minority entrepreneurs that didn’t come with a lot of resources.”
Jackson emphasized the unique benefits of search funds. He noted that they enable people who can’t think of a startup to go purchase established businesses. He reflected on his upbringing, stating, “It was normal for me to literally see in front of my door gang fights break out… I did not have as much access to seeing entrepreneurs.”
He continued, “I saw the barber shop that was down the street or the person that owned the barbecue shop… people that were making an honest living but barely livable wages.” This context inspired Jackson’s fierce drive to change the course of his life through entrepreneurship.
Search funds operate in four key stages: raising initial capital, searching for and acquiring a company, operating and creating value within that company, and finally exiting the investment. This step-by-step, fast-paced method is designed to make the process more accessible to entrepreneurs and investors alike.
Aik Chuan Goh, managing partner of Garlic Equity Capital, emphasized that search funds represent a viable option for aspiring business owners. Chief policy officer, and he emphasized how they open up a much safer investment climate than the more usual or traditional avenues.
As Staenberg commented, the sexy part of search funds is their ability to generate high returns. He highlighted the contrast between average stock market returns and those of search funds: “Over the last 40 years, the stock market has been somewhere around 8.5% annual returns. And then if you do see these staggering 35% return rates from search, it kind of catches your attention. We know this is a confusing process!
Eye-popping findings recently released by Stanford University have everyone talking about those implications. Specifically, they prove that the search fund bubble is permanent! In 2023, investors brought a record 59 new core funds to market beyond North America. This increase indicates that the impact investing model continues to grow in popularity around the world.
Jackson’s commitment to creating a new wave of entrepreneurs doesn’t stop with his own success. In 2020, he co-founded the Black Search Network. More than just funding, this initiative has built a wealth of knowledge to support aspiring entrepreneurs and searchers. This platform underscores Jackson’s belief that search funds empower individuals who are “gritty” and “hungry” to pursue their definition of the American dream.
“It also allows people who are gritty, who are hungry, who are willing to be coached, to pursue what we used to call the American dream — to build a business into even more success and have an exit and then come back and help others do the same thing.” – Jon Staenberg
Through their work with search funds, Jackson and Lawal illustrate how this model can be transformative for those who may not have had access to traditional entrepreneurial resources. Jackson remarked on the distinct advantages search fund investors bring to fledgling entrepreneurs: access to capital, a network of contacts, and proven strategies for operational success.
“What separates search fund investors is that they provide three things: a checkbook… access to a phone book… and a playbook.” – Jason Jackson
Your favorite success story may be the next big thing proving this investment model is turning entrepreneurial deserts into vibrant economies. Jackson’s journey is a testament to this change. He said the eventual sale of Unified Dental Care produced “a pretty good multiple,” underscoring success in the still-nascent search fund world, and a major turnaround from his initial fate.
“We eventually were able to sell the business at a decent multiple… really good compared to private equity but really great compared to where my partner and I came from.” – Jason Jackson