How to Structure a Search Deal That Attracts Investors

You’ve spent months searching. You’ve found a great business. You’ve signed an LOI. Now comes the last part: raising the capital to close.

In self-funded ETA, this moment is critical. Investors typically move fast—but only when the opportunity is clearly laid out, well-structured, and easy to underwrite.

At ETA Funding Partners, we review dozens of deals every month. Some are immediately compelling. Others miss the mark—not because the business isn’t good, but because the structure is off, the risks aren’t well addressed, or the incentives aren’t aligned.

If you're preparing to raise equity for your deal, here’s what we—and most experienced ETA investors—look for.

1. A Clear and Conservative Deal Structure

Before anything else, we want to see that the deal structure is realistic, thoughtfully underwritten, and built for durability. That includes:

• Total purchase price and how it compares to EBITDA
• Debt financing terms, sources, and repayment assumptions
• Equity required and how it's being allocated
• Projected cash flow and debt coverage under conservative assumptions

We don’t need hockey-stick projections. We want to know: Can this business support the debt? Does it generate enough cash to provide downside protection?

Deals that pencil only in aggressive growth scenarios are much harder to fund.

2. Appropriate Use of Leverage

Most self-funded ETA deals use a combination of SBA loans or conventional senior bank debt to fund 70–90% of the purchase price.

This can be a major strength—if done thoughtfully.

What we look for:

• Debt service coverage ratios (DSCR) of at least 1.5x under base-case assumptions
• Terms that give the business breathing room (i.e., long amortization, no early balloons)
• A clear picture of how much of the company’s cash flow will go toward debt vs. growth

If your deal is over-leveraged—or under-leveraged—it’s worth reevaluating. Investors want to know their capital is protected, and that the business has enough cushion to perform in less-than-perfect conditions.

3. Strong Incentive Alignment

One of the benefits of self-funded search is that operators usually retain a large ownership stake. That’s good. It shows commitment. It tells us you're betting on yourself.

Here’s what else signals alignment:

• Personally guaranteeing the loan (SBA or otherwise)
• Rolling in your own equity—whether that’s a cash contribution or time invested
• You’ve thought carefully about the cap table and how to reward performance

Searchers who are looking to offload risk entirely—or give up very little while asking others to fund the deal—tend to raise red flags. Investors want partners, not just participants.

4. Clear, Investor-Friendly Terms

Most ETA investors are looking for some combination of the following terms:

• Preferred return – A minimum annual return paid to investors before profit-sharing
• Equity step-up – Bonus ownership (e.g., 1.5–2.5x) based on capital invested
• Liquidation preference – Priority return of investor capital

You don’t need to include every feature in every deal. But having a clear, professional term sheet that reflects market norms goes a long way. It shows you're prepared—and that you understand what capital providers are evaluating.

5. A Business With Fundamentals That Make Sense

Even the best structure won’t save a weak business. Here’s what we look for in the underlying company:

• $750K+ in consistent, recurring EBITDA
• Business to Business or contract based sales with low customer concentration
• Recession-resistant industry or essential service
• Strong margins and low capex requirements
• A stable transition plan, with the owner exiting cleanly or assisting in a limited role

If you have these fundamentals, structure your deal to highlight them. Show us how the business performs under stress. Build a base case, not just a best case.

6. A Professional, Concise Presentation

Investors are evaluating your deal—but they’re also evaluating you.

A professional presentation that’s clear, organized, and investor-focused sends the message that you’re ready to lead. A disorganized, overly optimistic, or jargon-heavy deck raises concerns.

Here’s what to include:

• Executive summary of the business and the deal
• Financials: historical and projected, with debt assumptions
• Sources & uses of capital
• Deal terms offered to investors
• Risk factors and how you’re addressing them
• Your operating thesis and why you’re the right person to lead

You don’t need a 50-slide deck. But you do need a clean, coherent package that shows you’ve done the work.

Bottom Line: Make It Easy to Say Yes

Raising capital doesn’t have to be a mystery. The best deals tend to speak for themselves—because they’re thoughtfully structured, well-communicated, and built around shared incentives.

At ETA Funding Partners, we’re here to help self-funded searchers get to the finish line. If you’re working on a deal that checks these boxes, we’d love to see it.