Search Fund Terms: What an LP Nets at 2x, 3x, 5x
The same exit pays an LP a different amount depending on the structure. A waterfall model at 1.5x, 2x, 3x and 5x shows where terms matter and where they don't.
Free Template: The LP's Due Diligence Template — 20 Questions to Ask Any SMB Fund
The LP's Due Diligence Template
20 essential questions to ask any SMB fund or operator before writing a check
20
Essential Questions
4
Due Diligence Categories
3
Data Sources Referenced
Four Categories of Due Diligence
Operator & Team Assessment
Evaluate the operator's background, track record, skin-in-the-game, advisory team, and 100-day plan
Deal Economics & Structure
Understand purchase multiples, capital structure, investor terms, fees, and exit strategy
Business & Underwriting
Assess quality of earnings, customer concentration, operational risks, industry outlook, and scenario analysis
Governance & Reporting
Review information rights, protective provisions, LPAC structure, and conflict-of-interest policies
“Having a structured framework for evaluating SMB fund opportunities has been transformative. These 20 questions help me quickly separate strong operators from the rest.
From Our Blog
Dive deeper into LP due diligence:
- •How to Evaluate an SMB Fund — A complete evaluation framework
- •What to Look for in a Search Fund Operator — Evaluate operators across 5 dimensions
- •SMB Investment Risk Management for LPs — Protect your capital with structured risk management
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Who This Template Is For
This due diligence template is designed for accredited investors, family offices, and high-net-worth individuals evaluating SMB funds, search funds, or independent sponsor deals. Whether you're reviewing your first operator pitch deck or your fiftieth, this framework ensures you ask the right questions every time.
