What is an acquisition entrepreneur?
I suppose the simplest explanation is the easiest: an acquisition entrepreneur buys an existing (preferably already profitable) business and operates it as a going concern. This is in contrast to the classic (?) / better known (?) entrepreneur who starts a company from scratch.
Conceptually, an acquisition entrepreneur is inherently mitigating (though not entirely removing) the downside risk of failure because the business the acquire is already generating revenue, has customers, and is preferably profitable. The Lindy Effect is also taken into consideration and businesses which have been around longer are preferred as they theoretically have survived for a reason and are more likely to continue to survive even under new ownership.
Although it may seem that to be an acquisition entrepreneur, you need to have a lot of money in cash to make acquire a business, but that is actually not entirely true. In fact, most of my peers in this space turn to a combination of SBA (Small Business Administration) lending through a US banking partner, investors (either institutional or high net worth individuals), and / or financing from the seller of the business they are buying (through a seller note and / or rolling equity aka maintaining a percentage stake in the business).
Acquisition entrepreneurship goes by a handful of other names including, but not limited to:
- Entrepreneurship through Acquisition (ETA)
- Searchfunds / Searchfunders / Searchers / Searching
- Independent Sponsors
- Business Acquirer
- Mini Private Equity
I have been formally searching to buy a business for the last 18 months, though I learned about ETA 6 years ago (2019). I look forward to sharing more about my adventure.