Don’t Start a Company, Buy One Instead

Have you ever found yourself staring at your office walls after everyone else has gone home, asking if there’s a simpler way to achieve financial freedom? You might be craving the kind of purpose and autonomy that only entrepreneurship can deliver, yet you also want the security of a healthy bank balance. Starting from scratch is the classic approach—after all, isn’t building a new venture from the ground up the standard path? But there’s a different option rising in popularity: buying an existing, profitable business and then running it as the new owner. This method—often called Entrepreneurship through Acquisition (ETA)—might just be the vehicle that drives you to your seven-figure payday.

Rethinking the Startup Route

For many aspiring entrepreneurs, the default assumption is to hatch an innovative idea, pitch to venture capitalists, and pray for a massive exit down the line. Sure, the rewards can be huge if everything goes right. But the startup world is littered with stories of failed companies, vaporized valuations, and complicated investor preferences that can eat into your slice of the pie even when you succeed.

Another popular choice is to bootstrap a new venture. This approach avoids sharing ownership with venture capitalists, but it can involve extremely difficult years, limited resources, and the anxiety of waiting a decade or more for a meaningful cash-out—assuming the business ever hits that stage.

But what if you could skip the frantic search for a workable product-market fit, the long runway to profitability, and the high-level uncertainty of launching something brand new? That’s where ETA comes in.

Introducing Entrepreneurship through Acquisition (ETA)

ETA is a lesser-known path to entrepreneurship that focuses on purchasing an established business instead of starting one from scratch. Typically, you’ll look for a small to medium-sized operation with proven revenue, solid cash flow, and real potential for growth. After buying it, you become its leader—often stepping directly into the CEO role.

This concept first gained popularity at Stanford in the mid-1980s, and variations of ETA are now taught at leading institutions such as Harvard Business School and IESE. Over the last few years, more individuals have embraced ETA as baby boomer business owners retire in large numbers—sometimes referred to as the “silver tsunami.” Many owners don’t have a successor, opening the door for newcomers to step in.

Within ETA, there are two main funding structures:

1. Traditional Search Funds

• You pitch a group of investors on your skills and vision to buy and run a business.

• They invest in two rounds: one to finance your “search” process (often covering a modest salary and due diligence expenses), and another to provide the equity for the eventual purchase.

• You secure a percentage of the equity—often 15% to 25%—tied to performance and tenure.

2. Self-Funded Search Funds

• You bankroll the search phase on your own dime, limiting the risk for outside investors until you find a target.

• Once you locate a promising business, you typically bring in external capital to complete the acquisition.

• You still step into the operational leadership of the purchased company, but your personal stake can be higher since you assume more of the initial risk.

Why Buy Instead of Build?

The advantage of buying a stable, already-profitable company is that a lot of the early heavy lifting—product development, customer acquisition, organizational structure—has already been done. You’re jumping in at a point where the business is generating consistent cash flow. That means faster revenue, fewer proof-of-concept headaches, and potentially a shorter path to financial gain.

A study from the Stanford Graduate School of Business found that approximately 70% of people who launched a traditional search fund and successfully acquired a company ended up with an equity value exceeding $1 million by the time they exited. In many cases, this equity ballooned to $3 million or more, with an average of +$7 million. Meanwhile, a separate report from IESE Business School highlights the solid returns ETA can offer investors, boasting IRRs over a +20 year period in the mid-20% to low-20% range globally—comparable to, or even exceeding, established private equity benchmarks.

What Makes a Great Acquisition Target?

While the temptations of “disruptive” tech startups often grab headlines, ETA investors and buyers look for something entirely different: stable, “boring” businesses with strong recurring revenue. Think service providers, niche software, healthcare operators, or value-added distribution companies—places with repeat customers and predictable revenues.

Ideal ETA-friendly companies typically share these traits:

• Modest Purchase Price: You won’t usually be taking on a behemoth. Stanford research points to median acquisition prices around €10 to €15 million—affordable enough for individuals backed by a small group of investors.

• Consistent Cash Flow: Because acquisitions are often funded with debt, investors want to see regular, reliable earnings to cover interest payments. Volatility is a deal-breaker.

• Succession Challenges: Baby boomer owners are increasingly looking to retire, and many have no designated heirs. This vacuum creates ideal takeover opportunities, especially in niche or regional markets.

• Manageable Size: You don’t want to “buy a job” where the entire company rests on one or two people. At the same time, you’re not targeting large corporations with hefty price tags and complex organizational charts. You’re aiming for that sweet spot with enough structure to ease daily operations but plenty of room to grow.

Potential Outcomes—and Risks

If everything lines up—profitable business, supportive investors, straightforward transition—ETA can be life-changing. According to that same Stanford data, the median time to find and close a deal sits around 18 to 24 months, after which you become the leader of an already-functioning firm.

While it’s no guarantee of success, the average “hit rate” has been relatively strong. Harvard Business Review has noted that search funds yield competitive returns when compared to classic private equity deals, particularly in the small-cap space. One of the most famous success stories is Asurion, a roadside assistance and device insurance provider purchased for roughly $8 million by two searchers in the mid-1990s. Over the following decade, Asurion grew into an international powerhouse worth billions.

Of course, not every story has a fairytale ending. Some searchers never find a suitable target, burning through their search capital with no acquisition to show for it. Others sign on the dotted line only to discover hidden liabilities or market headwinds that sink the business—and their ownership stake—within a few years.

What’s in It for Investors?

ETA isn’t just attractive to would-be entrepreneurs; it’s also compelling for investors looking for healthy returns in the private markets. By backing a search fund or self-funded deal, you’re typically taking a position in a single operating company rather than a diversified fund. This can deliver substantial upside—multiples often land in the 2x to 5x range, with standout deals achieving even higher—but also comes with more concentrated risk.

One challenge from the investor side is the limited scalability of the search fund model. Each fund typically acquires just one company, so to build a “portfolio,” you’d need to invest in multiple searchers. Some family offices and specialized ETA investors do exactly that. They become experts in identifying and mentoring the right searchers, contributing expertise in due diligence, finance, and strategic growth.

With small to mid-market businesses frequently overlooked by large private equity, there are often inefficiencies in pricing and operations that a savvy buyer can fix. Incremental improvements—streamlining production, rebranding, minor tech upgrades—can substantially lift margins and the eventual resale value.

The “Silver Tsunami” Opportunity

As more baby boomers look to retire, the number of businesses needing new ownership is poised to grow. According to Project Equity, millions of small business owners are set to exit over the coming years, and a considerable proportion still lack a transition strategy. While technology startups in Silicon Valley grab all the headlines, the real wave of opportunity might be in these stable, cash-flow-positive firms tucked away in less flashy sectors—from B2B service providers in the Midwest to niche manufacturing plants in Europe.

This generational shift has become so pronounced that The Wall Street Journal has dubbed it a “silver tsunami.” For anyone willing to roll up their sleeves, it’s a chance to walk into a proven operation, keep it thriving, and perhaps elevate it to the next level—all while positioning themselves for a lucrative exit down the road.

The Path Forward

Entrepreneurship through Acquisition isn’t a magical formula, and it comes with substantial effort and risk. Identifying a solid company can take years, competition among buyers is on the rise, and financing can get complicated—especially in uncertain economic times. But for those who crave the autonomy of entrepreneurship without the near-total unpredictability of starting from zero, ETA can offer a viable, high-upside path.

So if you’re done clocking in at a job that doesn’t light your fire and you’re wary of the uphill battle that comes with a fresh startup, remember: sometimes the most direct route to ownership is buying a business that’s already up and running. The “seven-figure payday” you’ve been dreaming of might be closer than you think—because when you look for a shortcut in entrepreneurship, you just might find one through acquisition.