The Search Fund Operating Partner Model

The traditional search fund image is that of a solo entrepreneur, one searcher, one acquisition, one CEO. But a growing number of search funds are launched by two partners who search together, acquire together, and run the company together. This is the operating partner model, and when it works well it can be one of the most powerful structures in entrepreneurship through acquisition. When it fails, however, the consequences tend to be more damaging than a solo search gone wrong.

This guide covers everything aspiring partners need to know: when and why to consider a partnership, how to structure equity and decision-making, the legal agreements that protect both sides, what investors look for in a partner team, and the common failure modes you must actively guard against.

What is the operating partner model?

In a partnered search fund, two individuals jointly raise search capital, conduct the search for an acquisition target, and then co-lead the acquired company as its senior executives. Rather than a single searcher stepping in as CEO, the partner team divides leadership responsibilities between them, most commonly as co-CEOs or as a CEO and COO pairing.

The model is distinct from the traditional solo search fund in several important ways. Partners share the workload of sourcing, evaluating, and closing a deal, which can accelerate the search timeline. They bring complementary skill sets to the operating phase, covering more ground than a single CEO can alone. And they provide each other with a sounding board and emotional support through what is often a grueling, multi-year journey.

According to Stanford’s longitudinal data, roughly 30-35% of traditional search funds have been raised by partner teams. The proportion has remained relatively stable over the past two decades, suggesting that the model is neither a passing trend nor a dominant one, it is a legitimate alternative that suits certain people and certain situations.

When to consider a partner

Not every searcher needs a partner, and adding one purely out of fear or convenience is a recipe for trouble. The decision should be driven by a clear strategic rationale:

• Complementary skills: You have deep financial expertise but limited operating experience, and your potential partner is the opposite. The combination creates a team that is stronger than either individual.
• Larger or more complex targets: You plan to acquire a business that genuinely requires two senior leaders from day one, for example, a company with multiple locations, a complex sales organization, or operations that span different geographies.
• Risk sharing: In a self-funded search, splitting the financial burden of the search phase between two people can make the model viable for individuals who could not bear the full cost alone.
• Emotional resilience: The search is psychologically demanding. Having a committed partner who shares the ups and downs can reduce burnout and improve decision-making under stress.
• Investor preference: Some investors actively favor partner teams for their redundancy and breadth of skills. If your target investor base values partnerships, the model may help you raise capital more efficiently.

Conversely, you should not take on a partner simply because you lack confidence, because a friend also wants to do a search fund, or because you assume two is automatically better than one. A poorly matched partnership creates more problems than it solves.

How to structure the partnership

Equity split

In a traditional solo search fund, the searcher typically receives 20-25% of the acquired company’s equity, vesting over time. In a partner search, the total searcher equity pool remains roughly the same, 20-30% , but is split between the two partners. The most common arrangements are:

• Equal split (50/50 of the searcher pool): Each partner receives 10-15% of total company equity. This is the default when both partners contribute equally to the search and will hold equivalent roles post-acquisition.
• Unequal split (60/40 or 55/45): When one partner brings meaningfully more experience, capital, or will take the senior operating role (CEO vs. COO), an unequal split can reflect those differences. The key is that both parties agree the split is fair before the search begins.

For a deeper look at how equity is structured across the full cap table, including investor step-ups and vesting schedules, see our guide to cap tables and equity structures.

Role definition: co-CEO vs. CEO/COO

How partners divide operational authority after the acquisition is one of the most consequential decisions they will make. There are two primary models:

1. Co-CEO structure: Both partners hold the CEO title and share strategic authority equally. Decisions are made jointly, and neither partner has formal authority over the other. This model works when both partners have equivalent experience, when the business has natural divisions (e.g., two product lines, two geographies) that each partner can own, and when both individuals have the temperament for consensus-based leadership.
2. CEO/COO structure: One partner serves as CEO with ultimate decision-making authority; the other serves as COO (or CFO, CRO, or another C-suite title) with ownership of a specific operational domain. This model works when one partner is the natural external leader (investor relations, board management, strategy) and the other excels at internal operations (process improvement, team management, financial controls).

The CEO/COO model is generally more sustainable over the long term. Co-CEO structures can work in the early years when partners are deeply aligned, but they often break down as the business grows and decisions become more complex. Employees, customers, and board members prefer knowing who has the final word. If you choose the co-CEO model, build an explicit decision-making framework (more on this below) to prevent paralysis.

Decision-making framework

Every partnership needs a clear protocol for resolving disagreements. Without one, even minor disputes can escalate into full-blown conflicts that paralyze the business. Effective frameworks typically include:

• Domain authority: Each partner has final say over decisions within their defined area of responsibility. The partner who owns sales decides on pricing strategy; the partner who owns operations decides on vendor selection.
• Escalation protocol: For decisions that cross domains or involve major strategic commitments (acquisitions, large capital expenditures, key hires), define a process: discussion, data gathering, a structured debate, and if consensus is not reached, a tiebreaker mechanism.
• Tiebreaker: The tiebreaker could be the CEO (in a CEO/COO structure), a trusted board member, or a pre-agreed third party. The point is that both partners know, before a conflict arises, how it will be resolved.
• Board involvement: For an overview of how boards function in search fund governance, see our guide to board governance. In a partnership, the board plays an even more important role as a mediating body that can help resolve partner disagreements constructively.

Legal agreements: the business prenup

A search fund partnership without a strong operating agreement is like a marriage without a prenup, everything is fine until it isn’t. The legal documents that govern a partnership should be drafted at the very beginning of the relationship, when goodwill is high and the incentive to be fair is strongest. Waiting until a conflict arises to define the rules is a guaranteed path to a messy and expensive breakdown.

Key provisions of the operating agreement

• Equity allocation and vesting: How the searcher equity pool is split, what vesting schedule applies to each partner, and whether vesting accelerates in certain scenarios (e.g., termination without cause).
• Roles and responsibilities:A written description of each partner’s operational domain, reporting lines, and authority boundaries.
• Compensation: Salary, bonus structure, and any differences between partners. For context on standard compensation benchmarks, see our guide to searcher compensation.
• Buyout provisions: If one partner wants to leave or must be removed, how is their equity valued and purchased? Common mechanisms include fair market value appraisals, formula-based pricing (e.g., a multiple of trailing EBITDA), and installment payment terms.
• Non-compete and non-solicitation: What restrictions apply if a partner departs? These clauses protect the remaining partner and the business from competitive harm.
• Dissolution triggers: Under what circumstances can the partnership be dissolved entirely? Common triggers include mutual agreement, failure to acquire within a specified timeframe, breach of fiduciary duty, or a material change in personal circumstances (e.g., relocation, health issues).
• Dispute resolution: Mediation first, then binding arbitration if mediation fails. Litigation should be the absolute last resort it is slow, expensive, and destructive to both the partnership and the business.

Engage experienced search fund legal counsel to draft these agreements. Generic partnership templates are insufficient for the specific complexities of search fund economics, investor rights, and vesting structures.

Complementary skill sets: what to look for

The most successful search fund partnerships are built on genuine complementarity, not on two people who are good at the same things. The ideal partner brings strengths where you have gaps, and vice versa. Common complementary pairings include:

• Finance & operations:One partner with deep financial modeling, M&A, and capital markets experience; the other with hands-on operating experience in supply chain, manufacturing, or service delivery.
• Sales & technology: One partner who excels at revenue generation, customer relationships, and business development; the other who can drive digital transformation, systems implementation, and data analytics.
• Strategy & execution:One partner who is a strong strategic thinker and external communicator (board management, investor relations, M&A); the other who is an exceptional executor and team builder (process improvement, talent management, culture development).
• Industry expertise & general management: One partner with deep domain knowledge in the target industry; the other with broad leadership skills transferable across sectors. This pairing is especially valuable when acquiring a technically complex business where credibility with the existing team requires sector-specific knowledge.

Beyond hard skills, partners should assess their compatibility on work style, risk tolerance, time horizon, and personal values. Misalignment on any of these dimensions will eventually surface as conflict, typically at the worst possible moment.

Managing partner dynamics

Even the best-structured partnerships require ongoing maintenance. The pressures of searching for, acquiring, and operating a business will test any relationship. Partners who proactively invest in the health of their working relationship tend to outperform those who assume things will take care of themselves.

Communication cadence

Establish a regular rhythm of structured communication that goes beyond the daily operational back-and-forth. Many successful partnerships hold a weekly one-on-one meeting dedicated exclusively to the partnership itself, not the business, not the deal pipeline, but how the two partners are working together. Topics include decision-making friction, workload balance, personal stress levels, and any unspoken concerns. This practice prevents small irritations from compounding into major rifts.

Transparent financial management

Both partners should have full visibility into all financial matters , search fund expenses, personal compensation, investor communications, and eventually the acquired company’s financial performance. Financial opacity, even if unintentional, erodes trust faster than almost anything else in a partnership.

Adapting roles over time

The roles that make sense during the search phase may not be the right roles during the operating phase. During the search, both partners are typically focused on deal sourcing, evaluation, and investor relations. After the acquisition, the business may need one partner to focus entirely on sales while the other focuses on operations, or one may need to manage a complex integration while the other maintains continuity with the existing team. Build flexibility into the partnership agreement and revisit role definitions at least annually.

The investor perspective on partnerships

Understanding how search fund investors evaluate partner teams is essential for anyone considering this model. Investor perspectives on partnerships are detailed and often divided:

What investors like about partnerships

• Redundancy: If one partner faces a personal crisis, health issue, or simply burns out, the other can maintain continuity. In a solo search, losing the searcher means losing the entire investment.
• Broader skill coverage: A well-matched team can evaluate a wider range of deal opportunities and bring a more complete leadership package to the acquired company.
• Faster search: Two people sourcing deals, attending conferences, and meeting with brokers can compress the search timeline, reducing the total search capital burned before an acquisition.
• Better governance: Partners hold each other accountable in ways that a solo searcher, who may lack day-to-day peers, cannot replicate.

What investors worry about

• Partner conflict: The single greatest risk of the partner model. A partnership breakdown post-acquisition can destabilize the entire business, alienate employees, and destroy value.
• Diluted economics: The same equity pool is split two ways, meaning each partner has less individual upside. Some investors worry this reduces motivation, particularly in the later years of the operating phase when the grind of running a small business can wear on both partners.
• Decision-making speed: Partnerships can slow down decision-making, particularly in the co-CEO model where every major choice requires alignment between two strong personalities.
• Higher burn rate: Two salaries during the search phase mean higher search capital requirements or shorter runway with the same amount of capital.

To win over skeptical investors, partner teams must demonstrate genuine complementarity, a proven ability to work together (ideally evidenced by prior professional collaboration), and a clear, documented framework for roles, decision-making, and conflict resolution.

Common failure modes

Understanding how partnerships fail is just as important as understanding how they succeed. The most common failure patterns include:

1. Overlapping skills, not complementary ones: Two former investment bankers who both want to focus on deal analysis and neither wants to lead operations. The partnership adds capacity but not capability.
2. Undiscussed expectations: Partners assume alignment on lifestyle preferences (hours worked, travel, relocation), financial goals (when to take distributions vs. reinvest), and exit timeline (5 years vs. 10 years) without explicitly confirming it. These hidden misalignments surface painfully during the operating phase.
3. Ego and title sensitivity: Both partners want to be CEO, and neither is willing to accept the COO role. This signals a deeper problem: if neither partner can subordinate their ego for the good of the enterprise, the partnership is unlikely to survive the inevitable stresses of running a business.
4. No exit mechanism: Partners who skip the buyout provisions in their operating agreement find themselves trapped in a dysfunctional partnership with no clean way out. One partner wants to leave, but there is no agreed-upon valuation method, no funding mechanism for a buyout, and no process for an orderly transition.
5. Uneven effort: One partner works 60-hour weeks while the other works 40. One partner relocates to be near the business while the other stays in a major city. These imbalances breed resentment over time, especially when equity is split equally.
6. Friendship over function: Choosing a partner because they are your closest friend, your MBA classmate, or your former colleague , rather than because they bring genuinely complementary skills and a professional temperament suited to partnership. The best business partner and the best friend are rarely the same person.

Co-CEO vs. CEO/COO: a deeper comparison

The choice between co-CEO and CEO/COO structures deserves careful analysis, as it shapes nearly every aspect of how the partnership functions post-acquisition.

If you choose the co-CEO model, mitigate its weaknesses by clearly dividing the business into domains (e.g., Partner A owns revenue; Partner B owns operations and finance), documenting who has final authority on which types of decisions, and presenting a unified front to employees and external stakeholders at all times.

Case examples: partnerships in practice

The complementary duo

Two MBA classmates, one with a background in management consulting and the other in software engineering, raised a traditional search fund together. They acquired a mid-market B2B services company generating $3M in EBITDA. The consulting partner took the CEO role, focusing on client relationships, business development, and investor relations. The engineering partner took the COO role, leading a digital transformation initiative that automated key workflows, built a client-facing dashboard, and reduced operational costs by 18% in the first two years. Neither partner could have achieved the same results alone. They exited after six years at 4.8x MOIC.

The co-CEO challenge

Two former private equity associates launched a search fund as equal partners with a co-CEO structure. During the search phase, the model worked well: they divided deal sourcing by geography and evaluated targets collaboratively. After acquiring a healthcare services company, however, the co-CEO structure created friction. Employees were confused about reporting lines. Strategic decisions stalled when the partners disagreed. After 18 months of mounting tension, their board intervened and recommended a restructuring: one partner became CEO, the other became CFO with a defined operational domain. Performance improved significantly after the transition, but the first 18 months of lost momentum cost them at least a year of growth.

The friendship fallout

Two close friends from their undergraduate years decided to pursue a self-funded search together. They had no written operating agreement and split responsibilities informally. When they identified a target company, they disagreed on valuation: one partner wanted to bid aggressively, the other wanted to walk away. Without a decision-making framework or tiebreaker mechanism, the dispute escalated into a personal conflict. The partnership dissolved before they ever acquired a business, and the friendship did not survive either. A formal operating agreement with a dispute resolution clause could have saved both the partnership and the friendship.

Building a partnership that lasts

If you’ve decided that the operating partner model is right for you, take these steps to maximize your chances of success:

1. Test the relationship first: Before committing to a multi-year partnership, work together on a smaller project, a consulting engagement, a real estate deal, a detailed business plan. Observe how your potential partner handles disagreement, stress, and ambiguity.
2. Have the hard conversations early: Discuss compensation expectations, work-life balance, relocation willingness, exit timeline, risk tolerance, and what happens if one partner wants out. Do this before you raise a single dollar of search capital.
3. Draft the operating agreement before you start: Engage a lawyer experienced in search fund partnerships. Document equity splits, roles, decision authority, buyout provisions, and dispute resolution. Refer to our guide on getting started with search funds for an overview of the foundational steps.
4. Define roles clearly: Decide whether you will operate as co-CEOs or CEO/COO. Write down who owns which domain. Revisit this division after the acquisition when the actual needs of the business become clear.
5. Communicate relentlessly: Schedule dedicated partnership check-ins separate from business operations meetings. Address friction immediately rather than letting it fester.
6. Use the board: Give your board of directors an explicit role in monitoring the health of the partnership. A trusted board member who can mediate disagreements is invaluable.
7. Plan for evolution: Accept that roles, contributions, and even the partnership itself may need to change as the business grows. Build flexibility into your agreements and your mindset.

Is the operating partner model right for you?

The operating partner model is not inherently better or worse than the solo search, it is different. It suits people who genuinely thrive in collaborative leadership, who have identified a partner with truly complementary skills, and who are willing to invest the time and legal expense to structure the partnership properly from the start.

If you are considering this path, start by honestly assessing whether you need a partner for strategic reasons or simply want one for emotional comfort. Read our guides on searcher compensation to understand the economic trade-offs of splitting the equity pool, and on board governance to understand how a strong board can support, or replace, some of the benefits that a partner provides.

The best search fund partnerships are intentional, well-structured, and built on a foundation of complementary skills, shared values, and mutual respect. If you find the right partner and do the hard work of structuring the relationship properly, the operating partner model can give you a meaningful edge in one of the most challenging and rewarding journeys in entrepreneurship.

Frequently asked questions

What percentage of search funds use the operating partner model, and do partnered searches perform differently than solo searches?

According to the Stanford 2024 Search Fund Study, approximately 30-35% of traditional search funds are raised by partner teams, a proportion that has remained relatively stable over the past two decades. The performance data is detailed: partnered searches tend to have slightly higher acquisition rates (because two searchers cover more ground), but the aggregate return data does not show a statistically significant difference between solo and partnered funds. The key variable is not the number of partners but the quality of the partnership, teams with genuinely complementary skills and clear role definition outperform teams composed of two people with similar backgrounds. Investors report that the single greatest risk in partnered searches is partner conflict post-acquisition, which can destabilize the business and destroy value more severely than typical solo-searcher challenges.

How should partnered searchers split equity, and what vesting schedule is standard?

In a traditional search fund, the total searcher equity pool is 20-30% of the acquired company. In a partner search, this pool is split between the two partners rather than doubled, meaning each partner typically receives 10-15% of total company equity. The most common arrangement is a 50/50 split when both partners contribute equally and hold equivalent roles. An unequal split (60/40 or 55/45) is appropriate when one partner brings meaningfully more experience, capital, or will serve as CEO while the other serves as COO. Standard vesting is over 4-5 years with a one-year cliff. The critical principle is that the split must be agreed before the search begins, when goodwill is highest and the incentive to be fair is strongest. For a complete guide to equity structures, see our article on cap tables and equity.

What legal agreements do search fund partners need before launching?

At minimum, partners need a thorough operating agreement drafted by counsel experienced in search fund partnerships. Key provisions include: equity allocation and vesting schedules for each partner, written role definitions and authority boundaries, compensation terms (salary, bonus, any differences between partners), buyout provisions with a defined valuation methodology (typically fair market value or formula-based pricing), non-compete and non-solicitation clauses, dissolution triggers and procedures, and a dispute resolution mechanism (mediation first, then binding arbitration). Partners should also align on lifestyle expectations, hours worked, relocation willingness, exit timeline, risk tolerance, and document these discussions. Generic partnership templates are insufficient for the specific complexities of search fund economics, investor rights, and vesting structures. The legal cost of drafting these agreements ($10K-$25K) is a trivial expense relative to the cost of an unstructured partnership breakdown.

Sources

• Stanford Graduate School of Business, 2024 Search Fund Study (Partner vs. Solo Search Data)
• Harvard Business School, Search Fund Primer (Partnership Structures)
• IESE Business School, International Search Fund Study (Partnership Outcomes)