M&A Talk: #1 Podcast on Selling a Business For Buyers: Entrepreneurship Through Acquisition -- Insights from Harvard Business School Experts
Aug 8, 2024
Royce Yudkoff and Rick Ruback, both Harvard Business School professors, delve into the fascinating world of entrepreneurship through acquisition. They discuss the benefits of buying established businesses rather than starting from scratch. Insights include the dynamics of search fund investing, the advantages of tapping into the lower middle market, and the importance of connecting with retiring founders. The conversation also touches on the traits of an ideal business for acquisition and the challenges that aspiring entrepreneurs face throughout their journey.
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Entrepreneurship Via Acquisition Benefits
- Entrepreneurship through acquisition offers a lower-risk path by buying an established, profitable business.
- It involves purchasing from retiring founders and transitioning with them for operational continuity.
Search Funds vs Angel Investing
- Search fund investments acquire established, profitable businesses, differing greatly from the early risks of angel investing.
- This approach drastically reduces entrepreneurial risk due to known customers, revenues, and competitors.
Lower Middle Market Appeal
- The $4 to $15 million business segment is attractive due to less institutional competition.
- Lower competition results in more favorable purchase multiples for buyers in this market sector.