Entrepreneurship Through Acquisition

Entrepreneurship Through Acquisition is a proven model, where an aspiring entrepreneur searches for, acquires, operates and grows an established small business. The acquisition capital is provided by third party investors, while the new entrepreneur operator retains a significant equity share in the business.

The metaphor of Jockey, Horse and Trainer is often used to describe the model. Jockey is the aspiring entrepreneur searching to acquire an established target business that meets his/her own investment criteria. The Horse is an established business typically with a track record of existing revenues, cash flow, customer & supplier base with a motivated seller. Lastrly, the Trainer can be in the form of an investor, advisor, and/or accelerator who guides the acquisition entrepreneur through the search & acquisition process.

The ETA Search Fund model was pioneered by Irv Grousebeck (Stanford University) in 1984, and has since gained popularity at the elite U.S. MBA programs, such as Stanford, Harvard, Columbia and Yale. The model has gained traction in Europe with an eco-system of leading European business schools, former searcher turned investors, and highly talented European MBAs looking for a career trajectory that provides an opportunity for autonomy, equity ownership, and financial upside.

The ETA model has four key stages:

• Catalyze & Actualize: The aspiring entrepreneur formulates an investment criteria and a search strategy.

• Search & Acquire: The entrepreneur screens up to 300-500 targets, meets sellers, narrows the pipeline, conducts DD, arranges financing, negotiates purchase price, and acquires one target.

• Operate & Grow: the entrepreneur assumes the CEO position in the target company and drives value creation through operational improvements & revenue growth. 

• Exit: Liquidity events can occur in several ways, e.g. through trade sale, recapitalization, or a buyout.

More information on ETA

“Buying Your Way into Entrepreneurship” by Richard S. Ruback and Royce Yudkoff, Harvard

"Search Funds – What has made them work?" by Rob Johnson, IESE

"International Search Funds 2020: Selected Observations" by Lenka Kolarova, IESE

“The Finnish Search Fund Model” by Mikko Järvinen, Aalto University