MBAs Are Making More on Main Street than at McKinsey
They're looking to buy small to midsize businesses with recurring revenue, often in home services. But it’s not a foolproof model.
Here are today’s highlights:
Despite all of the corporate layoffs, the job market is holding up better than expected.
Chefs in San Francisco say they’re embarrassed by their own prices: “But we need to stay in business.”
The shutdown was challenging for Ami Kassar’s MultiFunding, which helps businesses get SBA loans.
Not sure what “agentic AI” is? You’re not alone, and it’s not too late. Yet.
ENTREPRENEURSHIP
It’s called entrepreneurship through acquisition, and it’s helping Baby Boomers cash out: “When Evan Reinsberg left Columbia Business School in 2023, he didn’t go down a typical career path by launching a startup or joining a big blue-chip firm. Instead, he started looking for a small business to buy. During school, Reinsberg started thinking about entrepreneurship through acquisition, or ETA, an increasingly popular approach being taken by would-be business leaders, who buy existing companies to scale them up. Reinsberg’s search took a year and a half. During that time, a group of investors, some of whom he met through Columbia’s alumni network, covered his expenses. Now 31, he estimates that he contacted thousands of companies before closing a deal last February to take over Chesapeake Technology, a sea-floor mapping company founded in 1995.”
“ETA has been ‘popular in certain circles for many years,’ but recently found more mainstream buy-in, says David Schonthal, an entrepreneurship professor at Northwestern University’s Kellogg School of Management who oversees student ETA efforts through the Zell Fellows accelerator program. That growth is thanks in part to business schools, which are launching more ETA classes, clubs, and fellowships.”
“Anyone with enough capital can do ETA themself, but David Snow, host of the ETA-themed video podcast Search Party, says the prototypical ETA-er is a recent MBA grad who, with the backing of third-party investors, spends around two years on the hunt for a company worth acquiring. If they find one, this searcher (as they’re called) typically buys it with the help of those same investors, and then streamlines, scales, and modernizes the company in hopes of eventually selling it for a profit.”
“Acquired companies tend to be small to midsize ones with predictable, recurring revenue, often in the service or B2B sector. Home services such as HVAC, roofing, and plumbing are hot. It’s not a foolproof model, Snow warns, given that there’s a nearly 50 percent chance the searcher won’t find a company to buy, and those who do might spend a decade failing to make it more valuable. But when it works, it really works.”
“The silver tsunami of Baby Boomer founders facing retirement has also been helping drive the trend. ETA is ‘really serving a market need,’ says Ben Francois, a managing partner at the advisory firm BanyanGlobal, which helps family businesses do succession planning.” READ MORE
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