A Day of Learning at INSEAD ETA Conference 2025 and My Perspective on Search Fund

Mac
Nov 24
3 min read

On 15th November, I spent the day attending INSEAD ETA (Entrepreneurship through acquisition) Conference and it was a day well-spent. There were ~200 participants that were either aspiring or active acquisition entrepreneurs, and investors. What makes this event so special?

This event covers a breadth of topics concerning search fund as a unique class of acquirers for SME businesses around the world. e.g. deal origination strategy, utilising various strategies to close the deal, the challenges faced by searchers, timeline, expectation and first 100 days as a CEO.

Overall, I feel that the participants are very smart, driven and possess significant social capital. A good number of them already had a successful career track.

For individuals looking to buy a business in Singapore, I recommend them to attend the upcoming ETA Conference in Singapore.This will give them a perspective of the challenges to anticipate if they decide to pursue this route.

While Search Fund is a positive development in Asia that gain publicity in the past 2 years, these are my 2 cents opinion on this particular asset class.

Positive of a Search Fund / Self Funded Searchers

With more acquirers in the market, it increases the probability of SME businesses being acquired. There are presently limited number of acquirers in Singapore for small businesses with a transaction value between SGD$3 mil to $20 mil.
The increase in acquirers will drive demand, which in term drive the transaction value of the businesses. Akin to how the acute housing needs drove the property price in Singapore. Business owners can have a bigger pay day!
This is a viable career option for individuals who are keen to do a mid career switch, or have been affected by retrenchment. Their commercial and professional skills that they have honed over the past decade can be put to test.
This class of asset can provide good returns for investors. Read this article written by INSEAD on Search fund returns.

Negative of a Search Fund / Self Funded Searchers

Most ETA searchers in Singapore do not possess entrepreneurial or M&A experience. They either have an overly - idealistic view of what a business should be or skewered towards risk avoidance. Whereas an experienced business operator is more likely to explore ways on how to manage risk itself.
Singapore is a small market - Most of the search funds or their variants has a high benchmark that will automatically disqualify majority of the business. Based on the graph below, I estimate that >90% of all the SMEs would be disqualified by the search funds. Since search funds tend to have a criteria of minimum SGD $1 mil EBITDA and a stringent list of criteria.
Valuation Gap between Buyer and Seller - Most of the SME owners in Singapore typically ask for EBITDA of 6X - 9X, whereas search fund typically offer at 3X - 5X. This disparity gap dramatically reduce any transaction success. Most SME owners would baulk at such a 'low' valuation. They would rather see their business dilapidate and eventually wind down, than to let it go and feel 'disrespected' or "lost face". "Face Value" or "Respect" is a big thing in Asia, especially for the Chinese community.
Challenges in Fundraising - It's common for acquirers to be unable to raise the fund they need for the acquisition, at the late stage during due diligence period. In Singapore, there are limited financing options for a small privately owned business. Acquirers who lacked a wide network of potential investors will struggle greatly in this regard.