Why wait? Business grads buying firms to install themselves as CEO
Summary
Some recent business school graduates are borrowing large sums of money to buy existing companies and become their CEOs, instead of working their way up in a company or starting a new business. This method, called entrepreneurship by acquisition or search-fund investing, is growing in the US, with many investors supporting young buyers to lead established firms.Key Facts
- Ania Aliev, 27, bought a medical equipment company soon after graduating with an MBA.
- She became CEO and led a takeover that doubled the company's size within a few years.
- Entrepreneurship by acquisition involves creating a "search fund" to attract investors and buy a business.
- In 2023, 94 new search funds were started in the US, with $682 million invested over 2022-2023.
- Specialized investment firms back young entrepreneurs buying companies this way.
- A Yale School of Management report says search funds often provide strong financial returns.
- Some employees welcome new owners and growth, while others may leave or be made redundant.
- For sellers, selling to young buyers is a way to retire or move on from the business.
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