Leveraging Search Fund Friendly Jurisdictions for ETA

The map of Entrepreneurship Through Acquisition is changing. For years, the search fund model was largely centered in North America. That is no longer the case. Europe has moved from being a secondary market to becoming one of the most dynamic regions for searchers.

For aspiring buyers and investors, location now matters as much as sector focus. The numbers show that certain European countries are pulling ahead, forming what can best be described as true search fund hubs.

In this article, we look at why countries such as Spain and France are experiencing strong growth in activity. We break down what makes their ecosystems attractive, from access to debt financing to deep local talent pools, and how you can position yourself within these markets for a successful acquisition.

The Rise of European Search Fund Hubs

The growth of search funds outside the United States and Canada has been exponential. According to recent data from IESE Business School, international search fund activity has reached record highs, with Europe leading the charge.

Why is this happening now? It’s a convergence of factors: a generational transfer of wealth, a maturing private equity landscape, and an increasing awareness of the search fund model among MBA graduates. However, not all European countries are created equal.

Spain and France have emerged as the clear frontrunners. In 2021 and 2022 alone, these two nations accounted for a significant portion of new search fund launches and acquisitions in Europe. They aren't just "active"; they are "friendly."

Why Spain is the ETA Capital of Europe

Spain is often cited as the most mature search fund market in Europe. The numbers back this up. Spain consistently ranks at the top for the number of active searchers and completed acquisitions outside the Americas.

A Favorable Ecosystem for Debt Financing

One of the biggest hurdles for any searcher is securing the debt required to close a deal. In many jurisdictions, banks are unfamiliar with the search fund model, essentially lending against cash flow rather than heavy assets.

Spain is different. Spanish banks have grown comfortable with cash-flow lending for SME acquisitions. The presence of specialized lending desks that understand the ETA model means searchers spend less time educating bankers and more time negotiating terms. This maturity in the debt market significantly de-risks the closing process.

The "Pyme" Culture

Spain’s economy is dominated by Small and Medium Enterprises (SMEs), locally known as "Pymes." Many of these businesses are family-owned, profitable, and facing a succession crisis. The founding generation is looking to retire, and often, the next generation is not interested in taking over the family manufacturing plant or logistics firm. This creates a massive supply of high-quality targets perfectly suited for a search fund acquisition.

France: The Rising Giant

While Spain had a head start, France has caught up with tremendous velocity. The French market offers unique advantages that savvy searchers are beginning to exploit.

Deep Talent Pools

France is home to some of the world's leading business schools, such as INSEAD and HEC Paris. These institutions have been instrumental in evangelizing the search fund model. As a result, there is a rich ecosystem of not just searchers, but also interns, advisors, and potential operators who understand the ETA playbook.

For a searcher, this means access to high-quality, low-cost talent during the search phase, and a robust network of peers for support.

Government Support and Bpifrance

The French public investment bank, Bpifrance, plays a massive role in the ETA ecosystem. They provide various guarantee schemes and financing options for business transfers. Their involvement signals strong institutional support for SME transmission, making it easier for searchers to bridge the financing gap.

Analyzing the Ecosystem: What Makes a Jurisdiction "Friendly"?

When we analyze the data on Mia, we look for specific indicators that signal a healthy search fund hub. It isn't just about the number of businesses for sale; it's about the infrastructure supporting the transaction.

1. Debt Availability

As seen in Spain, the availability of senior debt is the fuel for ETA. In friendly jurisdictions, you will find banks with specific "Acquisition Finance" teams for deals between €5M and €20M. In unfriendly jurisdictions, you are often stuck explaining what EBITDA is to a local branch manager.

2. Investor Density

Searchers need equity. Hubs like London, Barcelona, and Paris have a high density of serial search fund investors. These investors prefer to invest in jurisdictions they understand, where they know the legal framework and tax implications. Launching a search in a "hub" makes fundraising significantly easier because the capital is already there, watching the market.

3. Legal and Tax Framework

Friendly jurisdictions have standardized legal structures for these types of acquisitions. In the US, the ecosystem is so mature that legal fees are predictable. In emerging European hubs, we are seeing a similar trend. Lawyers in Madrid and Paris now have "search fund templates," reducing the friction and cost of getting a deal done.

How to Leverage These Hubs for Your Search

If you are planning to launch a search fund, understanding these geographic nuances is vital. Here is how you can use this market intelligence:

• Target Your Geography Early: Don't just say "Europe." Be specific. If you speak Spanish, focus on Spain to leverage the mature debt market. If you have a network in France, use the Bpifrance ecosystem.
• Follow the Capital: Look at where experienced serial investors are putting their money. They have done the due diligence on the jurisdiction's legal and financial safety.
• Network Locally: You cannot search effectively from a distance. If you target a hub, you need to be physically present to build relationships with local intermediaries who control the deal flow.

Conclusion

The era of the "Search Fund Hub" is here. The data shows that success in Entrepreneurship Through Acquisition is becoming increasingly correlated with geography. Spain and France have set the standard, creating ecosystems where debt is accessible, talent is abundant, and sellers are ready to transact.

For the modern searcher, leveraging these friendly jurisdictions isn't just a convenience, it's a strategic advantage. By aligning your search with these mature markets, you significantly increase your probability of finding, funding, and acquiring a great business.

Ready to dive deeper into the data? Explore more market intelligence on MIA.

About the author: Sevil Kubilay is the founder of Mia, a market and competitive intelligence platform for companies in fast-moving markets. With 20+ years at Fortune Global 500 companies including Bosch and Siemens, she specializes in market entry, product strategy, and go-to-market execution. Based in Amsterdam, Sevil mentors startups and writes about competitive intelligence and AI-driven growth.