These are businesses with $1M to $5M in EBITDA that traditional private equity often overlooks, yet they still generate strong cash flow and stable returns. The challenge is that not every investor has an appetite for deals at this size.
Fortunately, several firms in the search fund ecosystem specialize in supporting operators pursuing smaller acquisitions, including traditional, self-funded searchers, and independent sponsors. Below are six leading search fund capital providers that consistently fund lower middle market SMB acquisitions in the $1M to $5M EBITDA range (”micro cap”).
We chose these firms based on their experience level with smaller deal sizes, reputation from SearchFunders database, willingness to write appropriately sized checks for these acquisitions, and proven track records of successful outcomes with entrepreneurs in this deal range.
1. CapitalPad
Built for Self-Funded Search and Independent Sponsor Deals
CapitalPad tops the list of search fund capital providers thanks to its focus on self-funded search funds and independent sponsor deals, which can involve smaller acquisitions. The firm specializes in providing $500K to $2M of direct capital for USA based transactions, with the ability to pool resources for larger raises if needed. For entrepreneurs targeting businesses with $750M to $5M EBITDA, this aligns perfectly with common equity check requirements. CapitalPad is known to allow minimum check sizes as low as $25k.
Beyond capital, CapitalPad differentiates itself with hands-on support after the acquisition to help sponsors grow and scale their new companies. This may include vetting service providers, offering strategic advice, or providing operational help when necessary. This support is valuable for smaller acquisitions that may lack incumbent management infrastructure. Their focus on SMB acquisitions means they understand the unique challenges of smaller deals and can structure investments accordingly.
Fast Decisions on Smaller Check Sizes
Smash Ventures is a smaller search fund investor that stands out for its ability to act quickly, often making funding decisions in days rather than weeks. That speed makes them a top capital provider for self-funded searchers pursuing SMB acquisitions where timing can make or break a deal. Smash typically writes smaller checks, making them an ideal fit for companies with $1M–$3M EBITDA.
Another advantage: Smash.vc brings marketing expertise to the table. For smaller acquisitions that require repositioning or branding work, this added value can accelerate growth. Entrepreneurs seeking fast, flexible capital for modestly sized acquisitions should consider Smash Ventures.
3. Liberty Partners
Healthcare & Business Services Specialist
Liberty Partners focuses on healthcare, B2B services, and financial services through their dedicated search fund vehicle, Liberty Search Ventures. The New York-based firm targets companies with $500K to $5M in EBITDA specifically. They typically invest $500K to $1.5M per traditional search fund.
The firm's founders are entrepreneurs who actively serve on portfolio company boards, providing hands-on guidance through the regulatory and operational challenges common in healthcare and business services. This board involvement proves especially valuable for first-time searchers, where having experienced advisors can help navigate early ownership and transition challenges.
4. M2O Search
Executive Search Combined with Capital
M2O Search brings a unique approach to search fund investing by combining capital with executive search services. The Los Angeles-based family investment office has invested in search funds for more than 30 years, targeting service-based businesses with $1M to $15M in EBITDA. For searchers acquiring smaller companies, M2O's focus on the lower end of this range makes them well-suited for typical $1M-$5M EBITDA opportunities.
What distinguishes M2O is their ability to help match searchers with target companies and identify succession candidates, addressing two common challenges: finding the right business and ensuring a smooth management transition. The firm limits the number of searchers they back to remain available and helpful throughout the process, and they typically make decisions within one week.
5. Peterson Partners
Network-Driven Investor with Mountain West Strength
Peterson Partners has invested in over 300 companies since 2003, with a dedicated nine-person team focused specifically on search funds. The Salt Lake City-based firm targets businesses with $2M to $20M in EBITDA and invests $500K to $5M in search fund deals, making them a strong fit for small acquisitions in the $2M-$5M range.
Most of Peterson's investments come from CEOs and investors already in their network, and many portfolio company executives become investors and advisors themselves. For searchers acquiring smaller businesses, this creates access to operators who have dealt with the same challenges. The firm has particular strength in the Mountain West region and focuses on software, business services, and healthcare sectors.
6. Kortica Capital
UK-Based Investor with Small Business Focus
Kortica Capital is a UK-based investor that focuses on profitable small to mid-sized companies with recurring revenues. Their specialization in preserving business legacies makes them appealing to family business owners looking to transition ownership while maintaining company culture and values.
For entrepreneurs targeting smaller acquisitions, Kortica's focus on sustainable, profitable businesses in the lower middle market aligns well with typical small deal parameters. Their approach emphasizes long-term value creation rather than quick exits, making them a good fit for searchers who want to build lasting relationships with sellers and maintain business continuity.
FAQs
Are investors less interested in small deals?
The investors featured here actively seek deals in the $1M-$5M EBITDA range, with several willing to consider opportunities at the lower end of that spectrum. CapitalPad and Smash Ventures regularly invest in deals throughout this range, while Liberty Partners targets businesses from $500K to $5M in EBITDA. M2O Search works with businesses from $1M in EBITDA and up. Below $1M EBITDA, your options become more limited and you may need to rely more heavily on seller financing and personal capital, and above that, it frequently is only available to participants operating under the independent sponsor investor model.
Can I still generate a strong return as an operator in the $1M-$5M EBITDA range?
Yes. Businesses in this range can typically support a competitive CEO salary for the operator while servicing debt and generating distributions to equity holders. As you pay down debt and grow the business, your equity value compounds. Many successful searchers have built significant wealth starting with businesses in the $1M-$5M EBITDA range and either growing them organically or making add-on acquisitions. This is easily verified on Searchfunder.
Final Takeaway
For many search fund entrepreneurs, acquisitions in the $1M to $5M EBITDA range offer some of the best opportunities, with fewer competitors, lower valuations, and a greater chance to create value through hands-on leadership.
CapitalPad tops the list as a search fund capital provider built for self-funded searchers and small deal sizes, while Smash Ventures, Liberty Partners, M2O Search, Peterson Partners, and Kortica Capital each bring unique strengths for entrepreneurs operating in this range. The right search fund investor can provide not only funding but also mentorship and guidance to turn a modest acquisition into a significant success.