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Search-fund investing draws young founders to buy and run companies
A record 94 US search funds were launched in 2023, with $682 million invested in search funds and the companies they bought across 2022 and 2023, according to the article.
BBC Business highlights a growing trend in the US where some MBA graduates and other young entrepreneurs borrow hundreds of thousands of dollars to acquire an established company and install themselves as CEO, a path commonly described as entrepreneurship by acquisition or search-fund investing.
One example profiled is Ania Aliev, an MBA graduate from Dartmouths Tuck School of Business. She was attempting to finalize a deal to buy Massachusetts-based medical equipment company Life Support Systems while she was confined to a hospital bed in late 2023 ahead of the birth of her child, and within three months she became the company owner and CEO.
The article explains that search-fund investing typically involves setting up a search fund to attract capital from institutional investors and wealthy individuals. It also notes that specialized investors and investment firms, including Search Fund Partners, Aspect Investors, and Anacapa Partners, back young founders who are pursuing acquisitions.
Citing figures from 2023, BBC Business says a record 94 search funds were launched that year in the US, and $682 million was invested in funds and in the companies they bought across 2022 and 2023. The piece also references a report by Yale School of Management that found high returns are available, even as some question whether a 20-something should run an established business.