The Shifting EtA Landscape: The Rise of Self-Funded Search with HBS Professors Royce Yudkoff & Richard Ruback
Mar 6, 2025
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Royce Yudkoff and Richard Ruback, Harvard Business School professors and co-authors of the Harvard Business Review Guide to Buying a Small Business, share their insights on the evolving landscape of Entrepreneurship Through Acquisition (EtA). They discuss the shift from funded to self-funded searches, highlighting why this model has gained traction among MBAs. The duo also explores how financing options have transformed, the impact of SBA loans, and the increasing diversity in the EtA space, revealing how small business ownership now serves as a viable alternative career path.
The evolution of Entrepreneurship Through Acquisition (EtA) showcases its transformation into a respected career path beyond elite MBA programs.
Increased financing options, such as institutional capital and SBA loans, have made acquiring small businesses more accessible for searchers.
The rising diversity in the searcher community signals a shift towards inclusivity in small business ownership, empowering people from various backgrounds.
Deep dives
Overview of Entrepreneurship Through Acquisition (ETA) Education
The podcast discusses the structure and focus of Entrepreneurial Through Acquisition (ETA) coursework at Harvard Business School (HBS). Professors Royce Yudkoff and Rick Ruback teach this program, which consists of three main courses aimed at equipping students with the practical skills needed for buying small businesses. The fall course introduces students to the market of small business acquisitions, while the spring course delves deeper into the practical steps of sourcing, equity raising, and due diligence with the help of industry experts. A specialized seminar assists committed students in developing their search strategies, emphasizing the intensive, hands-on learning experience of the ETA education.
Increasing Interest in ETA Careers
Interest in Entrepreneurship Through Acquisition among MBA students has significantly increased over the years, now being seen as a viable career option rather than a fringe choice. Professors attribute this growth to the success stories of past students who have thrived as searchers, encouraging newer students to consider this path. The normalization of ETA as a career choice reflects a cultural shift where students’ families now support this ambition, easing previous concerns about job security that were once prevalent. Additionally, a tougher job market has provided students the space to explore alternatives like ETA, making it a more appealing option.
Evolving Landscape of Financing for ETA
The podcast highlights the evolution of financing options available to small business searchers in recent years. There has been a notable increase in national banks and small private equity funds willing to invest in searchers, providing more avenues for raising both equity and debt. This change has made it easier for searchers to secure the necessary funding for their acquisitions, contrasting sharply with the challenges faced a decade ago. As a result, the landscape for self-funded searches is also improving, with recurring investors now more prevalent and willing to back these smaller deals.
The Role of Family in the ETA Decision-Making Process
A key point discussed is the family aspect of pursuing an ETA career, particularly for mid-career searchers who often have spouses and children. Transitioning to a small business acquisition can significantly impact family dynamics, requiring open communication and support from family members. Professors emphasize the need for searchers to involve their families in the decision-making process, addressing recurring themes of relocation and lifestyle changes. The workload and stress inherent in running a small business can strain family relationships, highlighting the importance of alignment and support for successful transitions.
Diversity and Talent in the ETA Field
The podcast emphasizes a positive shift toward greater diversity within the searcher community, moving away from a historically male-dominated field. More women and individuals from varied professional backgrounds are considering the entrepreneurial path due to its flexibility and potential compatibility with family life. Success stories of diverse searchers help to inspire others, showcasing that a wide range of individuals can effectively run and own small businesses. The growing recognition that entrepreneurial opportunities are accessible to everyone, regardless of gender or background, points toward a more inclusive future for ETA.
This episode features guests Royce Yudkoff and Richard (Rick) Ruback, co-authors of the Harvard Business Review Guide to Buying a Small Business, and professors at Harvard Business School (HBS). Royce and Rick have spent more than 15 years teaching Entrepreneurship Through Acquisition(EtA) and have witnessed the category evolve from a niche MBA pursuit into a mainstream career path for mid-career professionals and beyond.
The conversation covers how EtA has expanded beyond elite MBA programs, the shifting dynamics of self-funded vs. funded search, the evolution of financing options, and the role of small business acquisition as an alternative to traditional career paths. Royce and Rick share insights on how self-funded search has become a dominant trend, the growing diversity in the EtA space, and what the future holds for small business ownership.
Discussion Points:
Introduction to HBS professors Royce Yudkoff & Richard Ruback
The rise of interest in the EtA category, both in and outside MBA programs
Success stories helping legitimize EtA as a mainstream career path
How the financing landscape for EtA has evolved over the past decade
Advantages of SBA loans and the common misconceptions of personal guarantees
Balancing family considerations and relocation decisions when executing a search
The impact of institutional capital entering the EtA market and its effect on returns
The rise of self-funded search as the preferred model among Harvard MBAs
Commercial acumen, EQ, and sales skills - key traits in small business success
How mid-career professionals can transition into EtA (without leaving their jobs)
The importance of embedding yourself in the business community before you buy
Predictions for the future of EtA and how the category will continue evolving
Masters in Small Business M&A (sign up for the podcast here) is produced by its host, Peter Lehrman, and the team at Axial (www.axial.com). Axial makes it easy for small business owners to confidentially explore growth capital and exit transactions with top-ranked lower middle market M&A advisors and professional capital partners. In every episode, we explore the dynamic world of small business M&A, interviewing a mix of proven and emerging owners, operators, acquirers, and M&A advisors whose strategies and methods are being put to the test.
If you’d like to go deeper, head to Axial.com, where we make available the Axial member directories, downloadable tools for dealmakers, the Axial quarterly lower middle market investment banking league table rankings, the SMB M&A pipeline report, and other helpful information. If you’re a business owner, professional acquirer, or M&A advisor, you can start using Axial for free at Axial.com.