Most people assume you need years of CEO experience or deep industry knowledge before you can buy and run a traditional small business. Pascal Wittet and Sandy Farmer, Co-Founders of Orca Equity Partners, think the evidence points in a different direction.

Speaking with Will Maunder-Taylor on Unsung, they explain why Orca backs talented professionals to acquire established small businesses, even if they have never run a company before and why the funds of search funds sector is seeing close to double the returns of traditional private equity.

Rather than focusing on sector expertise, they look for people with the ability to lead, learn quickly and earn the trust of founders who have often spent decades building their businesses.

Orca did not begin with the idea of backing first-time CEOs. The strategy grew out of a problem Sandy repeatedly encountered while investing in small private equity deals.

His team would find profitable owner-managed businesses where the founder wanted to retire, but there was no management team ready to take over. Unless they already knew the right CEO to step in immediately, they had to walk away from attractive opportunities.

That led to a different approach. Instead of finding businesses first and then looking for leaders, Orca decided to identify talented people first and help them search for businesses they could acquire and run themselves.

As Sandy explains, they were "really solving a problem that we saw" after years of investing in succession situations.

One of the biggest surprises for people discovering entrepreneurship through acquisition is that Orca often backs people who have never been CEOs before.

Pascal believes success comes from matching the right person with the right type of business rather than expecting someone to know every detail of an industry from day one.

The businesses they look for are deliberately stable. They usually have recurring or highly repeatable revenue, strong margins and healthy cash generation. Those qualities give a new CEO time to understand the company, meet customers and learn from experienced employees before making significant changes.

As Pascal explains, stable revenue "gives the incoming CEO time to learn the business, time to learn the people, time to meet the customers, time to figure out where the gaps are in the business without having to rush around and try and find revenue to fill the hopper."

Rather than chasing fashionable industries, Orca often invests in businesses that many people would overlook. Fire safety, testing and inspection, HVAC and other business-critical services may not sound exciting, but they continue to operate through economic cycles because customers cannot simply stop buying them.

Academic qualifications and career progression matter, but only to a point.

Sandy says most candidates already have strong professional backgrounds. What really separates people is how they behave when things become difficult.

"We're mostly looking for grit and resilience," he says. "Have they had some real meaningful setbacks, and how did they handle those?"

Empathy is equally important. Buying a business is not just a financial transaction. Founders are often handing over something they have spent much of their lives building, and trust plays a huge role in making a deal happen.

Sandy also looks for humility and self-awareness. New CEOs will inevitably face situations they have never experienced before, so recognising what they do not know and asking for help becomes a strength rather than a weakness.

The biggest improvements after an acquisition are often surprisingly simple.

Pascal says many founder-led businesses have grown successfully but underinvested in the systems and people needed for the next stage of growth.

New CEOs often begin by strengthening the leadership team, introducing better management information and implementing systems such as CRM and ERP software.

As he puts it, "We're working at a much more basic level." The goal is to put "good people with good data" in place so the business can make better decisions.

Sandy adds that the aim is not only to grow profits but also to build a more professional organisation. Better reporting, governance and stronger management make the business more attractive to future buyers.

One of Orca’s strongest examples is Water Direct, a UK provider of alternative water supply services acquired by first-time CEO Adam Johnson.

Adam had not worked in the sector before, but the business had strong underlying economics and clear room to grow. Instead of making major changes immediately, he spent time learning how the company worked before strengthening the leadership team, improving the finance function and gradually introducing better systems.

Water Direct also completed an acquisition within its first year under new ownership. Pascal credits the speed of that move to the strength of the management team around Adam.

In less than three years, the company grew from roughly £3 million in EBITDA to around £10 million. Eurazeo later agreed to acquire a majority stake through its Transition Infrastructure Fund, giving existing investors liquidity while bringing in a new partner to support Water Direct’s next phase of growth. Adam remains CEO, and Eurazeo’s investment will help expand the company’s fleet and logistics network and strengthen its digital capabilities.

The transaction generated a return of more than five times invested capital for Orca’s investors. For Pascal, the story shows that first-time CEOs do not need decades of sector experience to create value. With the right business, support and incentives, they can grow a company by building a strong team, improving its systems and making better decisions over time.