Harvard professors Rick Ruback & Royce Yudkoff talk about writing the bible of search funds, common threads in case studies, advice for new CEOs, changes in search, and their podcast. They discuss challenging scenarios for CEOs, buying cyclical businesses, and the evolution of search funds. Topics include teaching effectiveness, reasons for buying cyclical businesses, and the benefits of self-funded search.

Rick Ruback and Royce Yudkoff, Harvard Business School professors and co-authors of "HBR Guide to Buying a Small Business," discuss their impact on entrepreneurship through acquisition. They share how their class grew from 17 to nearly 300 students and the emotional challenges faced by students balancing family expectations with entrepreneurial dreams. Insights into the profitability of unconventional businesses and learning from failures are key topics, as well as their passion for educating future entrepreneurs through their podcast and innovative teaching methods.

In this episode, I continue to pull on one of the most interesting threads that I have uncovered while producing this podcast: the world of permanent equity. My guests today are Royce Yudkoff and Rick Ruback, two Harvard Business School professors who have partnered to create a popular class that teaches students how to search for, acquire, and run a small business directly after graduation. I approach this conversation from an investors standpoint. LP investors usually partner with these searchers to form what is called a search fund. A search fund allows recent MBA grads to spend time looking for a business and ultimately acquire it. The result is a small scale but often high return proposition for investors. I loved our discussion of what to look for in a business and what to avoid. The principles we list are useful for investors of any kind, and will particularly appeal to those from the buy and hold, value investing, and quality investing camps. One point of note which wasn’t captured during the recording. One of the reasons this style of investing isn’t more well known that it is extremely costly upfront. It can take years to find a company, and once found, the transaction costs can be 20% of the total purchase price. Rick calls this category “REALLY private equity. If you enjoy this conversation, be sure to check our Royce and Rick’s book. HBR Guide to Buying a Small Business, which goes into many of the topics we cover in even greater detail.   For comprehensive show notes on this episode go to http://investorfieldguide.com/hbs For more episodes go to InvestorFieldGuide.com/podcast.  Sign up for the book club, where you’ll get a full investor curriculum and then 3-4 suggestions every month at InvestorFieldGuide.com/bookclub Follow Patrick on twitter at @patrick_oshag

Richard Ruback and Royce Yudkoff, both esteemed professors at Harvard Business School, explore the intriguing landscape of entrepreneurship through acquisition. They discuss how retiring baby boomers are reshaping business sales and the unique challenges buyers face in this climate. Insights on finding the right businesses, evaluating them, and common mistakes abound. They also dive into financing options, emphasizing the advantages of SBA loans. This conversation blends academic expertise with practical advice for aspiring entrepreneurs.

Rick Ruback and Royce Yudkoff, both Harvard Business School faculty, dive into the world of acquiring small businesses. They discuss the advantages of acquisition over traditional startups, emphasizing better risk-return ratios. The conversation highlights their new show inspired by a popular course, aimed at sharing relatable success stories from entrepreneurs. Listeners will learn strategies for business search processes and funding options, making the journey of entrepreneurship through acquisition accessible and engaging.