Which of the following most accurately describes a search fund?

A search fund is best described as a model where entrepreneurs seek funds to acquire existing businesses. This model allows aspiring entrepreneurs to raise capital from investors with the intention of purchasing and operating a pre-existing company, rather than starting a new venture from scratch. Typically, these entrepreneurs will identify potential target companies, conduct due diligence, and then use the funds raised to finalize the acquisition.

This approach is particularly appealing because it allows the entrepreneur to leverage the established operations, customer base, and revenue streams of an existing business, which can often reduce the inherent risks associated with creating a startup from the ground up. The objective here is to enhance the acquired business through strategic improvements and operational efficiencies, providing a return on investment for the funders.

In contrast to the other options, a search fund specifically focuses on acquisition rather than mere fundraising or operational cost reduction strategies, making the model distinctive and aligned with the entrepreneurial aspiration of buying and growing existing businesses.