How to Build High-Impact Search Fund Boards

This article written by Ibrahim Abdel Rahim , Managing Partner at Moonbase Capital, was first published in Search Funds News .

As an investor in search funds and a former operator who has built and scaled SMEs and family businesses - including an exit to a global companies - I’ve seen firsthand how the right board can transform a company’s trajectory. Today, I sit on 2 boards of SMEs that Moonbase Capital has backed through search fund entrepreneurs. Having worn both the operator and investor hats, I know how valuable a great board can be - and how frustrating a poorly structured one is.

Recently, I came across Search Fund Company Boards: How CEOs Can Build Boards to Help Them Thrive published in 2018 by AJ Wasserstein and Jason Panaos for Yale School of Management - a research paper that dives deep into what makes search fund boards effective. It reinforced much of what I’ve experienced in practice and highlighted a few things that even seasoned investors sometimes overlook. Below are the key takeaways from the paper, along with my thoughts on why they matter in the real world.

1. The Board’s Role is Far More Than Governance

A search fund board isn’t just there to review financials and approve big decisions. For first-time CEOs - who are often learning on the job - it should be a trusted source of guidance. A well-functioning board acts as a mentor group, helping the CEO navigate challenges, avoid pitfalls, and scale the business. As the paper puts it, “the most effective boards do more than oversee - they actively support CEOs in strategy, leadership development, and making critical introductions.”

That doesn’t mean overstepping or micromanaging. There’s a fine balance between offering help and interfering in daily operations, and the best boards know how to strike it. The goal is to provide strategic direction, not run the company from the boardroom.

2. Who’s on the Board Matters More Than the Board Itself

A board is only as good as its members. Many search fund boards start out investor-heavy, which is understandable - investors want to protect their capital. But a board full of investors, with no operators or industry experts, is a missed opportunity.

CEOs need board members who have built and run businesses, people who understand the nuances of hiring, scaling, and problem-solving. Having at least one or two independent directors with deep industry knowledge makes a huge difference. They bring a fresh perspective and act as neutral voices when investor-CEO tensions arise.

3. The CEO-Board Relationship is a Make-or-Break Factor

A board can be structured perfectly on paper, but if the relationship between the CEO and board members is weak, it won’t work. Trust, transparency, and open communication are essential. The worst-case scenario? A CEO who views the board as a group they have to “report to” rather than a team of advisors they can lean on.

CEOs should proactively engage their board members, not just when things are going well, but especially when they’re not. If a CEO only shares polished updates and avoids discussing real challenges, the board’s potential impact is severely diminished. The best boards create a dynamic where the CEO feels comfortable being candid, knowing that the board is there to support, not judge.

4. Boards Should Evolve Alongside the Business

What a Search fund acquired SME needs from its board in year one is very different from what it needs in year five. Early on, investor-heavy boards are common, but as the company scales, it’s critical to bring in directors with hands-on experience in the industry. The paper highlights that “as businesses grow, their boards must grow with them - shifting from capital protection to value creation.”

A board that doesn’t adapt can become a liability. CEOs should think ahead and anticipate when it’s time to restructure, ensuring they have the right mix of skills and perspectives to support the next phase of growth.

5. Active Boards Create More Value Than Passive Ones

Some boards meet once a quarter, go through a checklist, and call it a day. Others roll up their sleeves, making introductions, mentoring the CEO, and actively contributing to strategic discussions. The difference between the two is night and day.

The best board members don’t just show up - they add value between meetings. They help CEOs think through hiring decisions, connect them with potential partners, and provide guidance when challenges arise. A truly engaged board can be one of a CEO’s biggest assets. A passive board? Just a formality.

6. Independent Directors Can Be a Game-Changer

Many search fund companies wait too long to bring in independent directors, but the sooner, the better. Independent board members - those who aren’t investors - bring a different perspective, helping balance financial oversight with operational expertise.

They also help mediate conflicts. When tensions arise between investors and CEOs (which they inevitably do), independent directors serve as neutral voices who can focus on what’s best for the company, rather than any single stakeholder.

7. Board Meetings Should Be High-Value Conversations

A well-run board meeting doesn’t get lost in spreadsheets and operational updates - it focuses on the big picture. CEOs should send materials in advance, so board members arrive ready to engage in meaningful discussions. Board meetings should be about solving problems, not just reviewing past performance.

Some of the best meeting start with a simple but powerful question: “What are the biggest challenges keeping you up at night?” That question shifts the conversation from reporting to problem-solving, making the meeting much more valuable.

8. A Good Board Helps CEOs Become Great Leaders

For many search fund CEOs, this is their first time leading a company. The learning curve is steep, and a strong board can make that transition a lot smoother.

A great board doesn’t just focus on company performance - it helps the CEO develop as a leader. That means offering guidance on hiring, decision-making, and even personal resilience. Running a company is tough, and the best boards recognize that supporting the CEO as a person is just as important as supporting the business.

9. Governance Should Drive Accountability, Not Bureaucracy

Good governance isn’t about creating more red tape - it’s about making sure decisions are made efficiently and transparently. When roles are clear and decision-making is structured, the board becomes a force multiplier, not a bottleneck.

A culture of healthy debate is crucial. Board members shouldn’t just nod along - they should challenge assumptions and push for clarity. But that challenge should always be constructive, not adversarial. The best boards hold CEOs accountable without making them feel like they’re constantly being scrutinized.

10. Investor Expectations Must Be Balanced with Long-Term Growth

Investors understandably want strong returns, but great search fund boards understand that sustainable growth often requires patience. CEOs need board members who think beyond the next quarter and focus on building long-term value.

The best investor board members aren’t just financial overseers - they’re strategic partners. They understand that the real goal isn’t just maximizing EBITDA in the short term, but building a company that thrives for years to come.

Some final thoughts…

A strong board can be a search fund CEO’s biggest advantage - if structured and leveraged correctly. The best boards don’t just review numbers; they drive growth, challenge CEOs to be better leaders, and provide strategic guidance that extends beyond oversight.

For search fund entrepreneurs, my advice is simple: build your board carefully, engage them fully, and remember - a great board isn’t just there to check a box; it’s there to help you win.

But here’s a question that many are talking about: do search fund-acquired SMEs have adequate boards at the moment? Is this a concern?