M&A Talk: #1 Podcast on Selling a Business For Buyers: Entrepreneurship Through Acquisition -- Insights from Harvard Business School Experts
Aug 8, 2024
Royce Yudkoff and Rick Ruback, both Harvard Business School professors, delve into the fascinating world of entrepreneurship through acquisition. They discuss the benefits of buying established businesses rather than starting from scratch. Insights include the dynamics of search fund investing, the advantages of tapping into the lower middle market, and the importance of connecting with retiring founders. The conversation also touches on the traits of an ideal business for acquisition and the challenges that aspiring entrepreneurs face throughout their journey.
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Why Founders Sell Businesses
- Sellers usually part with companies due to personal reasons like retirement, not financial incentives alone.
- Finding sellers nearing retirement is key as they seek less work and legacy stewardship over maximizing price.
Competition In Lower Middle Market
- Small EBITDA businesses often avoid private equity due to economics, limiting competition for search funds.
- Sellers often prefer holding if offers aren't adequate, delaying sales until retirement or other triggers.
Profile of Search Fund Entrepreneurs
- Many searchers come from diverse backgrounds including military, engineering, and business.
- Typical age is late 20s to early 30s with some mid-career professionals pursuing acquisition entrepreneurship.