Entrepreneurship through acquisition is gaining momentum as an alternative to starting a business from scratch. Instead of navigating the high failure rate of startups, some professionals are using search funds to purchase and lead existing companies. One prominent firm, New Orleans-based Search Fund Accelerator, provides salary, expenses, and hands-on coaching to help entrepreneurs identify and acquire businesses with proven track records.
Rachel McGrath, a former oil and gas engineer, represents this shift in strategy. She used the search fund model to acquire a specialty chemicals company in Pennsylvania and has already successfully expanded the business by adding a competitor to its portfolio. The process involves identifying stable companies from owners ready to retire, a demographic shift often described as the silver tsunami. Many retiring owners prefer handing their business to a successor who intends to operate it rather than selling to an impersonal private equity firm.
While the model has roots in the 1980s, the current landscape includes nearly 900 funds across North America. Search Fund Accelerator distinguishes itself by providing the capital to close deals, eliminating the need for entrepreneurs to piece together funding from multiple investors. Founder Tim Bovard emphasizes that success depends on finding candidates who possess actual operational knowledge rather than just high-level consulting experience.
Despite the clear interest, the path remains rigorous. Candidates must prove they have the capacity to manage daily operations, such as maintenance or manufacturing tasks. The success rate for these acquisitions varies, but investors continue to pour money into the space due to high returns. As baby boomers retire in record numbers, the opportunities for searchers to step into established companies appear set to increase over the coming years.