Small and medium enterprises (SMEs) remain the backbone of the UAE’s economy, contributing approximately 63.5% to the country’s non-oil GDP. As their numbers are expected to surpass one million by 2030, access to funding continues to be a significant challenge for many SME owners. A growing trend, however, is offering a new solution—search funds.
Search Funds: A New Investment Model
Search funds, a relatively new concept in the UAE, are private investment companies established to acquire and grow SMEs. Typically, an MBA graduate or a small team raises funds from investors to search for and acquire a single, well-established SME. This model has been successful in the US and Europe and is now gaining traction in the UAE.
“I first learned about search funds while studying at Harvard. Initially, they were mostly focused on Western markets. But with increasing economic growth in the UAE and greater interest from global investors, the time is now right,” said Adam Giansiracusa, Managing Partner at Oryx Legacy.
Last year, entrepreneur Edmond Husseini launched Gulf Succession, the first search fund in the UAE, paving the way for others to follow. Currently, three search funds are operating in the region, including Giansiracusa’s Oryx Legacy in the UAE and OxMar Partners by Ghassan Ayidh in Saudi Arabia.
How Search Funds Work
Search funds typically target SMEs with annual net profits between $1 million and $5 million. These businesses are often family-owned, with owners looking for succession options. Unlike venture capital firms that invest in startups, search funds focus on stable businesses with strong cash flows, recurring revenue, and scalability.
“My search fund is focusing on sectors like pet services, education, IT services, tourism-related businesses, and healthcare,” Giansiracusa explained. “However, we are open to opportunities in any industry that fits the search fund model.”
A search fund usually acquires 80-100% of a business through a mix of debt and equity. Investors, both local and international, finance the acquisition. The search fund entrepreneur earns equity in the business based on performance, ensuring alignment with investors’ interests.
A Growing Need for Business Succession
A key factor driving the growth of search funds is the “silver tsunami”—the increasing number of retiring business owners worldwide. In markets like the US, nearly 25% of small businesses are owned by people over 65. In the UAE, succession planning is also becoming crucial, as many business owners consider retirement or look to return to their home countries.
“This is the largest wealth transfer in history,” Giansiracusa said. “In the UAE, many entrepreneurs are looking for a smooth exit, whether to retire or shift focus to another business. Search funds provide a structured way to transition their businesses to the next generation.”
Looking Ahead
While search funds in the UAE are still in their early stages, industry experts expect the first acquisitions to take place soon. For aspiring entrepreneurs, this model presents a unique opportunity to take over and grow established businesses in a rapidly expanding market.
“My plan is simple—find a great business in the next two years, acquire it, and build it over the next decade,” Giansiracusa added. “With the UAE’s strong economic potential, I am excited to be part of this journey.”
As SMEs continue to be a vital pillar of the UAE’s economy, search funds could play a crucial role in ensuring their longevity and success.
