An increasing trend sees recent Master of Business Administration graduates bypassing traditional career ladders to purchase existing companies and install themselves as chief executive officers. This practice, known as entrepreneurship by acquisition or search-fund investing, involves entrepreneurs raising capital from investors to buy a business and then manage its growth.
In 2023, a record 94 search funds were launched in the U.S., attracting $682 million in investments across 2022 and 2023. Specialized investment firms like Search Fund Partners, Aspect Investors, and Anacapa Partners are emerging in the U.S. to support these young entrepreneurs. Investors are drawn to potentially high rates of return, with a Yale School of Management report indicating substantial profits and relative stability for these funds.
For business owners looking to retire or move on, selling to a younger entrepreneur offers a pathway out. For the buyers, the goal is typically to expand the company over five to ten years before selling it for a profit. Ania Aliev, who earned her MBA and had a finance background, acquired Life Support Systems over two years ago at age 30. She consciously adopted an observational approach initially, avoiding immediate imposition of her will on the existing team. "If you judge a book by its cover, it's very easy to be like 'oh, young girl, Wall Street background, coming in here and telling me what to do'… I was really conscious about that," Aliev stated.
Aliev has since led the company to acquire a competitor, doubling its size. Her focus on growth has been largely positive, with one long-term employee noting that Aliev has "turned a lot of stuff around." However, the transition has not been universally smooth; some employees have departed, and others were made redundant due to an unwillingness to work within a growth-oriented environment.
The path of entrepreneurship by acquisition can also lead to failure. Scott Duncan, an MBA graduate from Harvard Business School, acquired F&M Tool and Die, a Massachusetts-based industrial parts manufacturer, in 2018. Despite a background in engineering that seemed a good fit, Duncan, then 31, described his first day as "terrifying" due to the experienced workforce's perplexity with his new leadership.
Duncan faced significant challenges, including skilled employees leaving, one of whom started a competing business that attracted a key customer. He also found the organization deeply entrenched around the previous owner's personality, making it difficult for anyone else to run effectively. The company's struggles were further compounded by the COVID-19 pandemic, increased competition from China, and a workshop flood. After a seven-year battle for survival, Duncan was forced to shut down F&M Tool and Die in February 2025. The experience led to Duncan filing for personal bankruptcy, describing himself as "a shell of a human being."