Buying a $30M In-Person Tutoring Business Through Search Fund Accelerator

The Setup Dave Serwitz founded Make the Grade in 2002 in San Luis Obispo, California, and rebranded it Grade Potential. The model is deliberately old-fashioned: send human tutors into family living rooms for K-12 and test prep. By 2024 the company served 20,000 to 25,000 students per year across 40-plus states, doing just under $30M in annual revenue, with 20-30% top-line growth for three consecutive post-COVID years. Serwitz was 42. Not burned out. Not retiring. He wanted to stop, in his words, riding two horses with one ass, so he could pour more effort into another venture. That motivation shaped everything about how the deal ran: he was a founder selling into strength, not distress. Jared Lenner came at it from the opposite side. Economics and poli-sci at Chicago, a quant trading seat, then Darden for the MBA. He picked Search Fund Accelerator (SFA) over the bigger traditional search platforms on an incentive argument: SFA backs roughly five searchers a year versus 30-40 at larger shops, which he bet would mean sharper attention and cleaner alignment. The Deal Closed August 2024. Roughly eight months from first contact to close. Financed through SFA with a standard searcher stack of investor equity plus debt. Serwitz rolled just under a quarter of the equity, staying in the cap table without staying in the chair. The diligence phase nearly killed it. Serwitz had built the books using his own homegrown frameworks; he had reinvented concepts like negative working capital without using the standard terminology, which made early conversations with other searchers collapse before they started. Before engaging Lenner seriously, he hired investment bank Titan and commissioned an independent Quality of Earnings. That one decision unlocked the process. The deal-saving mechanism was relational, not structural. Both sides agreed to assume positive intent. Lenner gave Serwitz a direct instruction early: when your lawyers tell you the other side is being unreasonable, hang up and call me. Serwitz credits that hotline with saving the deal more than once during diligence. First 100 Days Day 33, the bookkeeper resigned. The trigger was Lenner asking her to convert the books to GAAP. She walked. For the next 60-90 days Lenner ran the company without a clean view of profitability while he hired a CFO and rebuilt the finance stack from the ground up. Other early moves: - Stood up proper GAAP reporting as the first operational priority, not a back-office project. - Kept the founder in the cap table and in-the-loop via equity roll, preserving tribal knowledge without founder-in-seat dependency. - Held operational changes light on the tutor-facing side while fixing the numbers underneath. Operating Lessons - If you are selling, commission an independent QoE before you talk to searchers. Homegrown accounting vocabulary is a deal-killer even when the economics are real. - Negative working capital businesses (tutoring is one: families prepay, tutors get paid later) need to be explained in standard financial language or buyers cannot underwrite them. - The bookkeeper is a concentration risk. Any small business...