Acquisition Entrepreneurship: One Solution to the Looming Business Succession Crisis

In the coming years, there will be a growing supply of small businesses held by an aging owner that need to execute a succession plan, transitioning the business to a new owner that can carry the business forward in future years. Unfortunately, very few of these Baby Boomer led businesses have a plan for who will take over for the primary business owner when the time comes, creating an emerging leadership crisis. However, there is an underutilized acquisition strategy that allows for a motivated and skilled entrepreneur to team with a small group of investors in an effort to search for (and ultimately to purchase) an existing small business. This paper highlights these transactions, often referred to as acquisition entrepreneurship through search funds, as a viable way to connect retirement-age business owners with an entrepreneur ready and willing to take over the business. Additionally, this paper endorses two strategies for educating entrepreneurs and investor groups on acquisition entrepreneurship, with the goal of making these complex transactions more accessible and more common.