"Is search a bubble?"
No.
(a) Valuations for SMBs and lower-middle market PE transactions have stayed disciplined in the 3.5x - 5.5x range for the last decade. This is happening because without committed funds, deal-by-deal sponsors/searchers have to stay within the parameters of what's bankable and finance-able in order to close.
(b) The supply of (good) businesses to acquire is not shrinking. Instead, the ever-impending silver tsunami and the more liquid exit market have improved supply.
(c) The quality of the searchers (operators) is perhaps more variable, but the strong returns have also attracted rockstars with deep vertical expertise.
(d) Search has shown resilience to economic cycles. This is obviously deal-specific, but overall search is a generalist and diversified asset class.
(e) Searchers' interests align with investors; there is reputational and financial harm in down-side scenarios, and huge opportunity in the upside.
