Search funds are gaining in popularity in Germany, Austria, and Switzerland (DACH) as a way of solving knotty succession issues.

These vehicles involve an entrepreneur assembling a group of investors to find, take over, and later run a long-standing company. The category, also known as entrepreneurship through acquisition, is particularly common with small and medium-sized enterprises (SMEs) run by owners who want a full exit.

On the buyside, search funds allow for more flexibility and hands-on control for investors. Capital is raised on a deal-by-deal basis rather than upfront.

Johannes Baier, a founding partner at Rohde Baier, and Aurelia Seidlhofer, Mergermarket’s Munich-based senior correspondent, join Dealcast host Julie-Anna Needham to discuss the emergence of search funds in DACH. Topics include:

• Why these funds can offer more flexibility and tailor-made solutions for investors over typical structures like private equity;
• Why search funds are gaining popularity in DACH, particularly in Germany’s Mittelstand (export-focused SMEs);
• The outlook for the emerging category as banks become more familiar with financing these transactions;
• The exit timelines and typical return expectations for investors and entrepreneurs involved in search funds.

All this and more in this week’s Dealcast.