Frequently Asked Questions

General

Entrepreneurship Through Acquisition – or ETA – is a concept wherein a business person becomes an entrepreneur by acquiring an existing business and becoming its operational leader, versus the traditional route of starting a business from scratch by taking a product or service from idea to commercialization.  

ETA offers the opportunity to immediately own and manage a company with established products or services, customers, employees, and cash flow with the potential to achieve significant financial returns without the start-up risks of launching a new venture.

Acquisition Entrepreneurs are often business professionals who desire to own and operate their own business, but do not have an idea for a start-up.   Candidates have typically included mid-career professionals, military veterans, and MBA graduates.   In fact, a growing number of top-tier business schools are adding Entrepreneurship Through Acquisition to their MBA curriculum, including Harvard, Stanford, and Carnegie Mellon Universities. 

I tend to work with budding entrepreneurs who have a calling to be business owners, including a strong passion to lead an organization and provide valuable goods and services to the community.

There are three traditional routes to becoming an Acquisition Entrepreneur:

  1. As a key employee, acquiring the business as part of a Management Buyout.
  2. Conducting a search to identify a business to acquire, and then assembling a team of investors and advisors to acquire the company.
  3. Creating a Search Fund and working with Search Fund investors (see additional info below)


The professionals with whom I work are most often following path #2 above.  However, I can help mentor an entrepreneur at the beginning stages, up to the point where he/she may partner with either a financial group to conduct a management buyout or a search fund investor group.

The short answer is no, but I can help Acquisition Entrepreneurs secure capital by helping them identify potential funding sources, participating in interactions with those sources, ensuring the business plan is complete and validated, and providing feedback on the viability of proposed deal structures.  

I believe there is more than enough capital available to be invested, given the right opportunity.  So my focus is on ensuring the entrepreneur is prepared, the business plan is sound for the company’s growth and attractive for stakeholders, and that the fit for the entrepreneur, the Seller, and the business is in alignment for success.

For Aspiring Entrepreneurs

If you have always dreamed of owning your own business, but either do not have an idea for a new one or believed you could not buy a business due to a lack of money, I encourage you to spend a little time exploring the pros and cons of becoming an Acquisition Entrepreneur. 

Here are a few initial factors for you to consider:

  • There may be lifestyle trade-offs between being a business owner and a salaried manager or employee, so you should consider your personal goals and aspirations.
  • The search process is typically a full-time effort that can take up to two years to find an appropriate match, with no guarantee of success. And there could likely be loss of income during this period.
  • Successful Acquisition Entrepreneurs have a strong drive to be leaders, seeking opportunities to have significant responsibility for all stakeholders, including employees, while thriving in managerial or leadership positions.


If you have the desire but do not have significant personal financial resources, that does not necessarily have to be a barrier to becoming an ETA.  

If you think acquiring a business is a realistic opportunity for you, I’d welcome the opportunity for an introductory video call to tell you more about this exciting pathway and learn more about you and your goals.

A Search Fund is an investment vehicle through which investors financially support an Acquisition Entrepreneur’s efforts to locate, acquire, manage, and grow a privately held company.  

Search Funds are usually started by one or two highly qualified MBA graduates (the “searcher” or “searchers”) to find and acquire a company. Investors in Search Funds are typically looking to put private equity capital to work by providing search funders with up-front spending cash and then eventually buy-out capital once an acquisition target is identified.

Search Fund target companies are often B2B service businesses with enterprise value between $5 million to $30 million and owned by founders seeking retirement. Post-acquisition, the search fund entrepreneur becomes the new CEO, earning a minority “sweat equity” position in the company. Average annual investment returns are around 35% according to Stanford’s Center for Entrepreneurial Studies.

If you are interested in more about Search Funds from an investor and entrepreneur’s perspective, you can download a primer on the Stanford Graduate School of Business website here.

Search Funds provide capital and expertise to the entrepreneur.  As ultimate majority investors, they may provide direction on the types of companies to be acquired and may require the entrepreneur to follow financial opportunities that may or may not totally fit his/her personal aspirations, including geography, industry, etc.  The opportunities they provide are very attractive and valuable but may not be a good fit for every individual wanting to acquire a business.  

For those professionals who do not fit the Search Fund model, I provide a personalized educational, mentoring, and connecting service that is custom to the individual.  My role is as advisor only, and not as an investor.

While there is a lot of information about Entrepreneurship Through Acquisition available online, two primary resources come to mind.

If you are interested in more about Search Funds from an investor and entrepreneur’s perspective, you can download a primer on the Stanford Graduate School of Business website here.

If you are looking for a step-by-step guide on how to buy a small business, we recommend the HBR Guide to Buying a Small Business by Richard S. Ruback and Royce Yudkoff.

Also, a growing number of business schools are adding Entrepreneurship Through Acquisition to their MBA curriculum.  If you are an MBA candidate, check to see if it is part of yours.

And, of course, Chris Farls at Acquisition Mentor  is here to educate and mentor you.  Let’s start with your first free 30-minute initial video consultation. Click here to set up a time to chat.

Since I do not have any direct experience buying into a franchise or dealing with franchisors, I would refer you to a franchise expert should you have an interest.

There is no fee for up to three introductory calls in which we discuss your aspirations and I provide insight into the ETA process.  Should you wish to pursue ETA and engage me as your mentor during the process, we can work out a mutually agreeable fee arrangement at that time.

For Business Owners

If you are business owner, here are three examples of how I can help:  

First, I can make introductions to one or multiple hand-picked budding entrepreneurs to give you the opportunity to get to know them and nurture a relationship prior to contemplating a sale.  

Second, I bring forth acquisition candidates that have already been vetted, educated and equipped with capital to close a deal to give you comfort that you are not wasting your time negotiating with non-qualified candidates.  

And third, should you desire to sell your business to your key employee(s) we can introduce him/her to an extensive network of potential investors.

From an owner’s perspective in the event that he/she does not have a relative or key employee to turn the business over to, the option to sell to and groom the next Owner Operator may be more attractive than selling to a Financial Buyer in two primary ways.

First, it may be the quickest way for the owner to exit the business.  Oftentimes, when an owner sells to a Financial Buyer there are stipulations in the deal for the owner to transition out over a period of years to give the financial buyer ample time to find and groom someone to run the business.  

Second, by selling to an Owner Operator, the current owner can groom and mentor the new buyer to lead the business in the way he/she would like the legacy to continue.

Current owners can benefit in multiple ways by working with me to meet potential Owner Operator buyers. 

First, I can be a matchmaker who can introduce current owners to one or more already vetted and qualified Aspiring Entrepreneurs. In doing so, I give current owners the opportunity to begin by developing a relationship, which I believe is key to successfully passing along a legacy.

Very importantly, I also ensure that a current owner is not wasting his/her time with non-qualified buyers by ensuring that the potential buyer is prepared with the education and capital resources to complete the acquisition at a fair valuation.

I embrace an owner’s desire to pass his/her legacy to a key employee but recognize that in many cases the key employee does not have the funding to complete the deal.  In those instances, I can provide access to our network of potential capital sources with interest in financing management buyouts.

I offer up to three no-charge introductory calls to share with you my experiences selling a business, discuss the benefits of selling to an owner operator, and explain how I may be able to help you in the process.  Should you wish to then continue working together, we can work out a mutually agreeable fee arrangement at that time.