In The Trenches Are Search Funds Moving Up Market?
Mar 5, 2026
Discussion about whether small-firm buyers are pursuing larger, middle-market companies. Talks cover risks of moving upmarket like complexity, higher multiples, and cap table issues. Summarizes a 50-person survey on target company size and current preference trends. Considers advantages of bigger deals such as deeper management, lending options, and economics, plus potential impacts on the broader ETA ecosystem.
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Host's Recent $7M+ Deal Encounters
- Steve DeVitkos shares five recent opportunities that contemplated acquiring companies with $7M+ EBITDA versus the $2.2M cohort average.
- He uses this personal sample to question whether search funds are shifting upmarket despite limited datapoints.
Why Larger Targets Offer Structural Advantages
- Search funds may benefit from larger targets due to deeper management teams and more lenders willing to fund deals.
- Steve DeVitkos notes $7M+ EBITDA targets offer bench strength, more exit options, and higher dollar carry for entrepreneurs.
Historical Deal Size Has Been Stable
- Historical Stanford data shows acquired company EBITDA has been stable around $1.7M–$2.5M over the past decade.
- DeVitkos cautions current anecdotes may predate reflection in datasets that end in 2023.