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Stern MBA Students Learn Entrepreneurship through Acquisition in New Stern Solutions Experiential Learning Project

High School

The term “entrepreneurship” typically conjures up thoughts of high-growth startups, billion-dollar ideas, and unicorns making headlines. But in fact, the majority of success stories actually come from small business owner-operators, forming the backbone of the US economy. This creates new kinds of entrepreneurial opportunities and unique career paths for MBA students at Stern. 

Over the past three decades Entrepreneurship through Acquisition (ETA) has emerged as an entrepreneurial variant to the much celebrated venture backed tech startup. In an ETA model, a successful small-to-midsize business (SMB) is acquired and a new CEO is put in place to drive growth and optimization. While ETA has quietly existed for many years, the sector has accelerated recently; Acquisition Entrepreneurship financial returns have outperformed all sectors by three times over the past decade, according to a recent search fund study by Stanford Graduate School of Business. And what’s more, a massive transition of wealth will occur over the next 10 years as Baby Boomer SMBs worth trillions of dollars seek new ownership. 

Stern MBA students are getting a front row seat in the rapidly evolving ETA sector through a new Stern Solutions experiential learning project that was first launched in Fall 2023.

“ETA Search Pipeline Deal Sourcing” was designed and led by Adjunct Professor Andrew Breen, who has actively engaged in the ETA process. The inaugural project consisted of MBA students from Stern’s two-year Full-time MBA, one-year Andre Koo Technology and Entrepreneurship MBA, and Langone Part-time MBA programs. 

According to Professor Breen, “Entrepreneurship through Acquisition is a prime growth sector for MBAs as they are able to put all of their skills from their MBA experience into action and can explore entrepreneurship as a career path through acquiring and then slotting in as CEO of a profitable existing business. Rather than developing a product or service from the ground up, they can identify existing opportunities that have the potential to reach new heights and drive that success without the stress of constantly raising capital or running short of it.” 

During the first part of the project, students learned what a search fund is and the components and variations of the ETA model, including the challenges, risks and opportunities that exist in the sector. 

From there, the learning became hands on as students began the actual search process. With Professor Breen’s guidance, students became familiar with the techniques, tools and databases used to conduct a search for SMBs that could be a potential fit for acquisition. Each week, the students presented Professor Breen’s Private Equity firm, The Build Buy Fund, with opportunities for consideration, receiving real-time feedback from industry leaders. 

“People in this industry call themselves ‘searchers,’ and most searchers will tell you in the beginning they wasted time making mistakes like not vetting enough companies or mishandling initial conversations with owners. In this project we aim to educate students on those common pitfalls and prepare them with the tools for success through real experience, especially if this is a career they would like to pursue.” 

James Tarte (MBA ‘24), Co-President of Stern’s Entrepreneurship Through Acquisition MBA student club, took part in the project in the fall. According to James, the project experience emphasized the importance of having a sophisticated proprietary search process. “If you want to find the best deals, you have to get upstream to the owners themselves,” he said. “And you cannot simply search for these individuals on Google and expect to come across an email list. It takes a great amount of strategy, technology, and persistence to find a winning deal.”

James noted the project also taught him valuable lessons he will carry on throughout his future career. “Searching is risky. And it takes a tremendous amount of persistence and grit to search successfully,” he said. “The lesson for me is that you have to be comfortable with more risk if you want to achieve outsized success in anything that you pursue professionally.”

In response to demand for the class and enthusiasm among the students, the project is extending into the spring. This same group of students will have the opportunity to either continue their search for Build Buy Fund, or to begin their own search process. 

“The Buy Build Fund was truly impressed with the fresh opportunities the students presented each week, and we look forward to continuing the conversation about some of the potential deals during the spring semester,” said Professor Breen.