Recent Master of Business Administration (MBA) graduates in the US are increasingly opting to buy established companies to become chief executives, rather than joining large corporations or starting new ventures. This approach, termed entrepreneurship by acquisition or "search-fund investing", involves young entrepreneurs borrowing hundreds of thousands of dollars to fund their purchases.
Ania Aliev, a 27-year-old MBA graduate in late 2023, acquired Massachusetts-based medical equipment business Life Support Systems three months after giving birth. Now 30, she has since led the takeover of a competitor, which she states has doubled the size of the business.
The practice has seen a rise in popularity, with a record 94 search funds launched in the US in 2023. Investments in these funds and the companies they acquired reached $682m across 2022 and 2023. Investment companies now specialise in backing these young entrepreneurs, attracted by reported high rates of return, according to a Yale School of Management report.
However, this path carries risks. Scott Duncan, who acquired F&M Tool and Die in 2018, faced a seven-year struggle to keep the business afloat, ultimately leading to its closure in February 2025 and his personal bankruptcy. He advises caution for those considering this route, highlighting the difficulties involved.
Leadership coach Jacqueline Ackerman suggests that workforces generally do not object to younger leaders due to age, but rather to the uncertainty that often accompanies significant change.