We have seen a significant uptick in reach-outs from “Searchers” who are looking to acquire small, medium-sized businesses (we define SMBs and a business earning between $500,000 to $3,000,000 of EBITDA). These searchers want to be entrepreneurs, but their preference is to “buy vs build”. We wanted to provide a quick overview of this evolving market.
Lets start with Entrepreneurship Through Acquisition, commonly referred to as “ETA”. ETA refers to the process where an individual, known as a “Searcher,” seeks to acquire an existing small or medium-sized business with the goal of becoming its owner and operator. Rather than starting a new business from scratch, the Searcher focuses on purchasing an established company, often one with a proven track record, customer base, and infrastructure in place.
The typical ETA process involves several key steps:
- Search: The Searcher looks for a business to acquire, often targeting companies that are underperforming or have potential for growth but lack leadership.
- Acquisition: After identifying a suitable company, the Searcher negotiates the purchase. Financing for the acquisition can come from various sources, including personal savings, loans, or investors.
- Operation: After acquiring the business, the Searcher assumes the role of CEO or manager, aiming to grow and improve the company.
The goal of ETA is to provide an opportunity for individuals to become entrepreneurs without the risks and challenges of building a business from the ground up.
The “Searcher” community refers to a network of individuals who are pursuing or have pursued ETA. These individuals often share insights, experiences, and resources to help one another navigate the process of finding, acquiring, and successfully operating businesses. The community may include other Searchers, investors, advisors, and professionals who are part of the ETA ecosystem. Many Searchers come from diverse backgrounds but are typically interested in taking on the challenge of running an established business rather than creating one from scratch. The community also includes accelerators, educational programs, and conferences focused on ETA.
In our next posting, we will provide some observations and advise on dealing with Searchers. As always, happy to chat – please reach out.