10th Annual Entrepreneurship Through Acquisition Conference at HBS: Key Takeaways

This weekend, I had the pleasure of attending Harvard Business School’s Entrepreneurship Through Acquisition Conference. For those new to the concept, “entrepreneurship through acquisition” or “ETA” is the concept and process of buying an existing business rather than starting one from scratch. ETA is a growing path to entrepreneurship, especially for individuals or syndicates looking to own and operate a business with an established customer base and proven cash flow. Often, this model is driven by "searchers," or in everyday terms, entrepreneurs who raise capital to search for and acquire a company they can grow and improve.

ETA has become an increasingly attractive option for aspiring entrepreneurs because it reduces some of the risks associated with starting a new business. Searchers focus on finding companies that already have solid operational foundations and use their skills and resources to take these businesses to the next level. In fact, “search funds”, the investment vehicles that finance these acquisitions, are regularly tracked by Stanford Business School, which publishes statistics on their performance (see Stanford Graduate School of Business 2024 Search Fund Study).

Here are my key takeaways from a beautiful Saturday in Cambridge:

Your Investment Thesis Will Evolve – Flexibility is Key

Most searchers start with a clear investment thesis, detailing the kind of business they want to acquire, the industry they prefer, and the financial or operational characteristics they’re looking for. However, the reality is that flexibility is essential. The market rarely presents ideal options, and buyers must be willing to adjust their criteria based on what is actually in existence and on sale.

This flexibility is especially important during due diligence, where previously unseen challenges or opportunities may arise. Whether you are looking at acquiring a local retail chain or a larger software business, it's important to remain open to refining your investment strategy as you learn more about the specific dynamics of the business and industry. Do not marry your thesis—it is probably incorrect or at least significantly underinformed.

Look for the ‘Right to Win’ – Leverage Your Competitive Advantage

A critical factor for success in acquisitions is identifying your “right to win.” This means focusing on businesses where you have a competitive advantage—something unique that allows you to run the business more effectively than others. This could be industry expertise, operational experience, or strategic insights that others may lack. A personal favorite is when a fed-up customer uses their own experience to step in and solve the problem, becoming the go-to provider they once needed. There is something powerful about transforming frustration into expertise, filling the gaps that others have overlooked, and establishing an undeniable “right to win”.

Understanding where you have the right to win ensures that you are choosing businesses that align with your strengths, rather than chasing deals where other buyers may be better positioned. This strategic focus is essential for long-term success. If you do not have the right to win, it is because someone else does. Respect the game and move on.

Repetition is Part of the Process – It’s a Numbers Game

Acquisitions, particularly in the ETA model, are often a numbers game. On average, searchers will sign an average of 3.1 Letters of Intent (LOIs) before successfully closing on a deal. Each LOI represents an important step in understanding the target, but the reality is that many deals fall through before they reach the finish line.

Whether you are looking to acquire a small franchise or a more complex company, it is critical to establish and maintain a robust deal pipeline. Not every deal will close, and the process is designed to help buyers refine their approach, adjust expectations, and make informed decisions. Repetition, whether through multiple LOIs or engagements with potential sellers, sharpens your ability to identify the right opportunity and increases your chances of success.

Know When to Walk Away – Protecting Your Interests

One of the most crucial aspects of business acquisition is knowing when to walk away from a search. In fact, this point was emphasized with an entire hour-long lecture at the conference, highlighting how critical it is to recognize when a search just isn’t worth pursuing any longer. It is not uncommon for searchers to invest significant time and resources into finding the perfect business, only to realize that the search itself is no longer viable or aligned with their goals.

This applies to searches of all sizes, whether you are targeting a small franchise or a larger company. Walking away from a search does not mean that you have hit a permanent dead end—it simply means that you have recognized that your time and expertise could be better applied elsewhere in the ecosystem. Financial red flags, lack of promising opportunities, or a changing competitive landscape are all valid reasons to pivot from searching for a business to a new role within the deal space.

Rather than forcing a search that isn’t yielding the right results, consider other ways to leverage your expertise. You might transition into an advisory role for other searchers, tap into your network to broker deals, or even partner with investors to curate acquisition opportunities. Patience and discipline are key—not every search ends in acquisition, but recognizing when to shift gears allows you to take advantage of new opportunities and contribute in different, meaningful ways within the ETA ecosystem.

Conclusion: Musical Instruments Case Study

To demonstrate the power of ETA, I would like to conclude by highlighting a captivating case study that opened the conference on Saturday morning. The example searcher targeted a music instrument rental company, recognizing a unique opportunity in a seemingly mundane business. Nearly every child in America plays an instrument in grade school, and most parents prefer renting over buying for obvious reasons. After acquiring the company, which already had existing school contracts and highly recurring revenue, the searcher implemented key changes. First, he approached the contracted schools and negotiated exclusive agreements, which allowed him to reinvest more in each partnership. With the additional revenue, he was able to offer premium services, such as providing backup instruments to schools. This ensured that if a student’s instrument broke or needed tuning, the teacher had an immediate solution, making teachers the "heroes" in the classroom and solving a persistent problem. This strategy was highly effective, as schools welcomed the exclusivity, deepened their partnerships with the company, and the business saw significant growth.

If you are considering an acquisition or need general guidance through the search process, please do not hesitate to reach out—we are here to support your journey every step of the way.