You might be wondering what Entrepreneurship Through Acquisition is, I know I did. ETA has been around for 20+ years, but is just recently gaining momentum and popularity. It is a different form of entrepreneurship because it entails purchasing an existing company vs. starting one from scratch.
The traditional venture-backed start up model is still alive and well, but as MBA grads are finding the job market shrinking for the top tier roles, ETA is emerging as an intriguing option. With an ETA approach, entrepreneurs can accomplish their goal of being an owner or CEO without the hassle of establishing a book of business, brand and team. They simply buy a well-performing small company.
As with everything, choosing Entrepreneurship through Acquisition has it’s pros and cons.
Pros:
- You can get to work in a leadership capacity immediately vs. building an organization.
- You instantly have a successful brand (if you’ve done your homework before purchasing)
- You can enjoy immediate income vs. waiting the traditional 2 – 3 yrs. to draw a paycheck.
- Entrepreneurs can often fund a company purchase with their own funds, vs. searching for multiple investors that will ultimately want a piece of equity in the business.
- You can use the revenue generated from the existing business to pay off whatever debt you may have incurred in the acquisition.
Cons:
- Finding the best company to purchase that suits your skills, background and desire could be challenging. (Most entrepreneurs that pursue ETA’s use what are called search fund experts to help identify possible purchasing opportunities)
- The purchasing process is typically pretty long.
- Failure rate has been high regarding the success of finding the right company to purchase.
The Kellog Institute, Harvard Business and others are now offering classes to MBA students that take them through the process of using this process to accomplish their entrepreneurial dreams. Get more details about this innovative approach here.
