Why I Don't Compete With The Searchers I Back

When a deal a backed searcher brings me fits my own acquire-side buy-box, my policy is to co-invest with the searcher rather than compete for the deal. I get asked about this often enough that it is worth writing down explicitly. It is not generosity. It is the only policy that actually works for the structure I have built.

The structural problem

I run two distinct capital activities. On one side, I acquire businesses directly through the acquire arm. On the other, I back searchers through the capital arm, including LP commitments to search funds and deal-by-deal co-invests on specific acquisitions.

When a backed searcher's deal happens to overlap with my own buy-box (residential and commercial services, healthcare services, NEMT, multi-unit restaurants, MSPs, $750k+ EBITDA, Continental US), the temptation for a less disciplined investor would be to use the searcher's diligence work to evaluate the deal and then compete to acquire it directly.

That move would destroy the entire operator-backing thesis in one transaction.

Why competing with backed searchers ends the relationship

A searcher who brings me a deal is sharing private information about a target I would otherwise not have access to. If I use that information to compete for the deal, I am taking the searcher's work product and turning it against them.

No searcher would ever bring me another deal. Worse, the searchers would tell every other searcher in their network. The backing relationship would end, but more importantly, my reputation in the searcher community would end with it. The future deal flow that comes from being a trusted backer of operators evaporates.

The co-invest policy in practice

When a backed searcher's deal fits my buy-box, the answer is structural. I commit to co-investing with the searcher on terms that work for both sides. Usually that means I take a meaningful position in the equity stack alongside the searcher's primary equity, with rights and economics that reflect the size of the check.

The searcher remains the operator of the business. I become a co-investor with operating-bench involvement during the integration and post-close period. The deal closes with both arms aligned, the relationship continues, and the searcher knows that bringing me future deals is a positive-sum proposition rather than a competitive one.

Why this works for the backed searcher

The searcher gets two things from this structure that pure capital LPs cannot provide.

First, an additional source of capital that does not require renegotiating the existing cap table. My co-invest is incremental, structured to fit alongside whatever capital the searcher has already raised.

Second, operating bench depth during the post-close period. The first hundred days after an acquisition are when most operating mistakes happen. A co-investor with twenty years of operating experience in the relevant verticals is a real asset to the searcher during that window.

Why this works for me

The acquire arm continues to find deals through its own channels. Not every in-buy-box deal in the universe needs to come through the acquire arm. The capital arm becomes more attractive to backed searchers because of the explicit no-compete policy, which improves the deal flow into the capital arm.

Both arms grow. The trust that compounds in the searcher community is the actual asset.

The honest version

If I competed with backed searchers when their deals overlapped my buy-box, I would close more direct acquisitions in the short term and lose the entire operator-backing flywheel in the medium term.

The math is straightforward. Compete once, lose forever. Co-invest, build the network. The policy is the structure.