1) Source: Stanford GSB Study

Entrepreneurship Through Acquisition (ETA) is a growing pathway for entrepreneurs who want to run a business without starting one from scratch.

Instead of building a company from the ground up, ETA entrepreneurs acquire an existing, profitable small business and step in as the new owner-operator. These are typically businesses with strong cash flow, loyal customers, and a long history of success, but the original owner is ready to retire or move on.

ETA takes a buy-not-build approach to entrepreneurship. It’s not about creating the next big thing, it’s about taking over a solid, often overlooked company and making it even better. And it is especially compelling in today’s market:

• Massive opportunity: Millions of baby boomers are retiring, many of them without succession plans for their businesses.
• Proven model: You are buying a business that already works, meaning revenue, profits, and customers are in place.
• High ROI potential: With the right structure, small business acquisitions can offer exceptional returns compared to other asset classes.

ETA is increasingly popular among MBA graduates, ex-consultants, ex-bankers, and operators, but anyone with drive, business sense, and leadership skills can pursue it. For relevant published articles, see:

• Bloomberg | "MBAs Are Spurning McKinsey to Buy Small Companies"
• Forbes | "An Introduction To Entrepreneurship-Through-Acquisition And The Secrets To Its Success"

Some searchers raise capital from investors up front (traditional search funds). Others fund the acquisition once they’ve found a deal (self-funded searchers — more on that in another post).

For investors, ETA is a way to access cash-flowing, small business ownership without needing to manage the business directly". It offers exposure to real assets, downside protection, and strong returns — often delivering 30%-35% Internal Rate of Return (IRRs) — in a part of the market that has been historically undercapitalized.