Entrepreneurship Through Acquisition: MBAs’ Pathway To Business Ownership & Growth

Entrepreneurship is often associated with starting something entirely new — an idea, a product, or a business from scratch.

However, a new approach called Entrepreneurship Through Acquisition is reshaping this narrative, offering a pathway for aspiring entrepreneurs to acquire and lead already established companies. Instead of navigating the complexities of building from the ground up, these entrepreneurs focus on managing and growing businesses with existing foundations.

ETA has surged in popularity, particularly among MBA students, as a way to fast-track their entrepreneurial ambitions. Business schools have started to respond to the growing interest in ETA by expanding their programs to provide students with the knowledge and tools needed for this entrepreneurial path.

With a growing range of courses and resources, these programs can equip aspiring business leaders with the skills necessary to successfully acquire and manage established companies. This article will explore the reasons behind the rise of ETA, how Chicago Booth School of Business’s ETA program is shaping this trend, and the impact this entrepreneurial model is having on both businesses and the economy.

UNDERSTANDING ETA

Chicago Booth’s Brian O’Connor

ETA involves acquiring existing businesses and taking on leadership roles, often as the CEO. Unlike starting from scratch, ETA allows entrepreneurs to scale established companies, leveraging existing customer bases and operations while introducing new leadership and innovation.

Originating at Stanford in the 1980s, ETA has become a popular option, particularly in the U.S., offering a lower-risk path to business ownership for those seeking the challenges of leadership without building a business from the ground up.

WHY IS ETA GAINING TRACTION?

ETA’s growth in the US has been driven by several factors, primarily the wave of retiring baby boomer business owners facing succession challenges. Rather than selling to large corporations or private equity, many are turning to new entrepreneurs to continue their legacy, creating a strong market for acquisitions.

Investors have also taken notice. Search funds, a key part of ETA, allow entrepreneurs to raise capital for acquisitions. Investors find them appealing for their potential high returns and stability compared to the riskier start-up model.

Chicago Booth has been instrumental in supporting the growth of ETA, by providing a variety of educational resources that help students explore and pursue this entrepreneurial path. Since 2019, participation in the Booth ETA program has more than doubled. This highlights the increasing interest in ETA as an alternative to traditional entrepreneurial routes, particularly among MBA students and alumni seeking opportunities in business ownership.

While ETA is well-established in the U.S., its adoption in Europe has been slower. However, recent years have seen a notable uptick in interest, particularly in countries like Spain and the UK, where the ETA ecosystem is gradually expanding. As more entrepreneurs and investors become aware of ETA, this model is expected to gain further traction across Europe.

HOW CHICAGO BOOTH’S ETA PROGRAM SUPPORTS ENTREPRENEURS

Chicago Booth’s Mark Agnew

At Chicago Booth, we are proud to be one of the schools leading the way in supporting entrepreneurs throughout their journey. For those just beginning to explore ETA, Booth offers introductory workshops and courses that provide a solid foundation in the acquisition process. For those further along, the ETA Fellows Program, launched this year, offers tailored support, including mentorship, offsite experiences, and expert-led workshops.

The Booth-Kellogg ETA Conference is an annual event that brings together search fund entrepreneurs, investors, MBA students, faculty, and other participants in the ETA ecosystem to connect and share insights into this rapidly growing field. The 2023 conference broke records with over 700 participants, including both students and industry professionals.

As a key networking event for those interested in ETA, it provides a valuable platform for exchanging ideas and fostering collaborations. It’s also a forum where several aspiring searchers receive funding from the most active investors in the space, further enhancing opportunities for growth and success in the ETA community. The program has also seen a remarkable increase in student and alumni engagement, further highlighted by the growing popularity of the ETA Insider Podcast, which garnered nearly 50,000 plays in 2023 alone, underscoring the rising interest in this field.

CHALLENGES & RISKS OF ETA

As ETA continues to grow in prominence, it’s important to recognise that while this path offers many opportunities, it also presents unique challenges. Acquiring an existing business involves navigating complexities such as integrating into the company’s established culture, managing its workforce, and adjusting to its operational structure. These hurdles can be particularly challenging for first-time business owners.

To help students address these challenges, Chicago Booth’s ETA program connects them with a strong support network that includes mentors, industry professionals, and alumni experienced in acquisitions. This network, along with the practical insights gained through the program, helps students better prepare for the realities of leading an acquired business.

Entrepreneurship Through Acquisition offers an appealing path for entrepreneurs seeking business leadership without the risks of starting from scratch. ETA courses, like those at Chicago Booth, provide comprehensive support, ensuring students are well-prepared with the resources, mentorship, and education needed for success. As awareness of ETA’s benefits spreads and more institutions expand their offerings, this model is set to grow in popularity in the U.S. and Europe, becoming a common route to business ownership.

ETA is not just shaping the future of entrepreneurship — it is playing a crucial role in business succession and economic growth. By providing entrepreneurs with the opportunity to lead established companies, ETA ensures that businesses continue to thrive under new leadership, benefiting both local economies and the global entrepreneurial landscape.

To find out more information about Chicago Booth’s Entrepreneurship Through Acquisition (ETA) program at the Polsky Center, visit this website: https://polsky.uchicago.edu/programs-events/entrepreneurship-through-acquisition/.

Brian O’Connor is an adjunct associate professor of entrepreneurship at the University of Chicago Booth School of Business and founder and managing partner of NextGen Growth Partners, a private equity firm that partners with talented entrepreneurs to acquire and build companies in growing industries. Mark Agnew is an adjunct associate professor of entrepreneurship at the Booth School and co-founder and chairman of Pickles Group, a non-profit providing children navigating a parent’s cancer with free resources and support. Together they head up the teaching of Booth’s trailblazing course, Entrepreneurship Through Acquisition.

DON’T MISS ENTREPRENEURSHIP THROUGH ACQUISITION EXPLODING AT WASHU OLIN & OTHER B-SCHOOLS