Difference Between a Search Fund and a Merchant Bank?

Gist of the Wikipedia explanation: search funds are essentially very small private equity funds that are looking to acquire a platform business in a fragmented industry and then take management roles within the companies they purchase.

From my own understanding of them, they are very entrepreneurial in nature and normally only consist of a few people. Ideal deal sizes are very small.

Merchant banks are operated out of financial institutions and offer various services, as well as doing private equity.

Search funds are tiny and usually have a staff of 2-3. They do 2 rounds of capital raising. The first round is for operating expenses (enough to last a couple of years) and then if they do find a good company, they go back to their investors and raise the necessary funds to purchase the company. Very entrepreneurial and a LOT of cold calling, the return potential for a search fund is immense, but a lot also fail at finding any companies. You see a lot of Harvard and Stanford guys doing these.