Business succession in small and medium-sized enterprises—a shared aspiration that has united us, Norma Bühling and Pia Surhoff, for over 1.5 years now. Born out of a deep desire to become entrepreneurs ourselves, our goal became increasingly clear: to take over a small-to-medium-sized business and continue running it personally and for the long term as managing directors and successors. But how can business succession be achieved without having sufficient personal funds to do so?
The Search Fund Model
When it came to the question of “how,” after extensive research and discussions with successful successor entrepreneurs, we came across the Search Fund model—a concept developed in the U.S. in 1984 by a Harvard professor. The Search Fund Model enables young entrepreneurs to search for and acquire a suitable company and, furthermore, to continue running it as managing directors over the long term. In this process, the aspiring entrepreneurs receive support from investors—who are often entrepreneurs themselves—and who, as mentors, provide guidance and financial backing throughout the search, acquisition, and subsequent operational management of the company. For example, the search for a suitable company is pre-financed by investors, allowing the aspiring entrepreneurs to focus entirely on this task. Later, the investors participate in the purchase and continue to support the entrepreneurs as mentors on their entrepreneurial journey.
While in the U.S. and Canada, more than 500 successor entrepreneurs have successfully carried out business succession using the search fund model since the 1980s, the model is still relatively unknown in Germany. According to estimates, only a few dozen people in Germany or the DACH region have set up a search fund. Yet it is precisely here that traditional business succession within families is becoming increasingly rare, and the need for external successors is growing ever greater.
Advantages of a Search Fund
While the search fund model alone will not solve the succession problem in Germany, it is nonetheless an attractive alternative for business owners looking to step down, investors, and those seeking to take over a business.
For business owners, this option offers a secure way to hand over their life’s work to a motivated and competent successor. Instead of selling to a financial investor or a direct competitor, they can transfer their company to ambitious, young executives who are supported by a network of experienced investors with a long-term investment horizon. This not only ensures the continuation of the company’s culture and philosophy but also its further development and renewal through fresh ideas and approaches.
For investors, the search fund model offers the opportunity to invest in stable and established companies that are being revitalized by new executives. They not only benefit financially from the company’s potential appreciation in value but can also actively contribute their expertise and experience to ensure a successful transition and the company’s continued growth.
Prospective business successors, in turn, gain the opportunity through search funds to realize their entrepreneurial aspirations without having to start a new company. They can step directly into a leadership position and assume operational responsibility from the very beginning. The support from experienced investors and the structure of the search fund provide a solid foundation for success and growth, while simultaneously minimizing the risk for the new entrepreneurs. This allows them to focus fully on leading and developing the company and effectively realize their dream of becoming entrepreneurs.
Thallo Business Succession—Germany’s First Female-Led Search Fund
For us, the search fund model was definitely the right way to start our search for the right company. Last year, we successfully completed our fundraising and are delighted to enjoy the support of carefully selected and experienced investors. What they all have in common is that they regularly invest in teams similar to ours, have a long-term focus, and possess extensive experience in successfully scaling a business. Above all, this long-term focus was important to us in our selection process, as we want to develop the company sustainably over the long term. In doing so, we operate autonomously, without the constraints of a larger corporate group or a fund. That’s what true entrepreneurship means to us!
We are particularly proud that our search fund, Thallo Unternehmensnachfolge, is the first female-led search fund in Germany. We deliberately chose the name “Thallo” for our search fund: “Thallo” is one of the three Athenian Horae, alongside Auxo and Karpo, and represents spring—that is, renewal, growth, and development—exactly what we, as successor entrepreneurs, aim to bring to a company.
About the Authors
Norma Bühling and Pia Surhoff are the founders behind Thallo Unternehmensnachfolge. Norma brings valuable experience from her time at Zalando, while Pia began her professional career at the management consulting firm BCG and continued in strategic roles at a startup and at Zalando. Together, they launched the “Thallo Unternehmensnachfolge” search fund in 2023 with the goal of acquiring and continuing to operate a mid-sized company. Their search focuses on the retail and e-commerce, IT and software, and B2B services sectors. Their goal is to actively and sustainably manage the acquired company, with a focus on long-term growth and a positive corporate culture.
