The ETA Playbook: Acquisition Entrepreneurship from Search to Close

Entrepreneurship Through Acquisition (ETA) has emerged as the most efficient path to business ownership for talented operators who want to skip the startup phase and go straight to running a proven, cash-flowing business. The model is elegant: raise a small search fund, find and acquire a business, and operate it as CEO.

But between the elegance of the model and the reality of execution lies a gauntlet of decisions that determine whether you end up as a successful CEO or a cautionary tale in next year's GSB case study.

Phase 1: Forming the Fund

The economics. A traditional search fund raises $400K-$600K from 10-20 investors to fund 18-24 months of search. Investors receive the right to invest in the acquisition at favorable terms. The searcher receives a 25-30% equity stake (typically vesting over time) for finding and operating the business.

Investor selection matters. Not all search fund investors are equal. The best investors provide:

• Follow-on capital for the acquisition
• Operational expertise in your target vertical
• A network of advisors, lenders, and co-investors
• Patience during the search and early operations

Self-funded search is an increasingly popular alternative. You fund the search yourself (or with a small amount of personal capital) and raise acquisition capital deal-by-deal. Lower dilution but higher personal financial risk.

Phase 2: Defining the Thesis

The most common mistake in ETA is an undefined or overly broad thesis. You do not have time to "figure it out as you go." The clock starts when you raise the fund.

Characteristics of good ETA targets:

• $1M-$5M revenue (sweet spot for search fund acquisitions)
• 15-30% EBITDA margins
• Recurring or repeat revenue base
• Low customer concentration
• Owner-dependent but not owner-only (there should be a team, even if the owner is central)
• Industry with secular tailwinds
• B2B preferred (more defensible, less consumer sentiment risk)

Phase 3: Sourcing

This is where most searches succeed or fail. The best searchers cast a wide net early and narrow as they learn what works.

Sourcing channels:

• Direct outreach to business owners (highest quality, highest effort)
• Business brokers and M&A intermediaries (mixed quality, relationship-dependent)
• Online marketplaces (lowest quality, but occasionally surface gems)
• Professional networks (CPAs, attorneys, wealth advisors who work with business owners)

The numbers: Expect to screen 1,500-3,000 companies, contact 300-600 owners, have 40-80 conversations, submit 3-8 LOIs, and close 1 deal. These are industry averages. Better sourcing infrastructure compresses the timeline.

Where Ted helps: Ted handles the identification and qualification stages, delivering thesis-matched targets with ownership verification and contact information. This shifts your time from database searching to owner conversations — the only activity that actually closes deals.

Phase 4: Evaluation and Diligence

When you find a promising target, move quickly but methodically:

• Preliminary evaluation (1-2 weeks): Review financials, visit the business, meet the owner, assess the team
• LOI negotiation (2-4 weeks): Agree on price, structure, and key terms
• Confirmatory diligence (6-10 weeks): Quality of earnings, legal, environmental, IT, insurance
• Closing (2-4 weeks): Final documentation, financing, transition planning

Total timeline from first conversation to close: 4-8 months. Faster if you have pre-existing relationships with lenders and have done your thesis homework.

Phase 5: Year One Operations

The first year as owner-operator is the most critical. Common priorities:

• Stabilize. Do not change anything for the first 90 days. Learn the business from the inside.
• Professionalize. Implement proper financial reporting, KPI tracking, and management rhythms.
• Retain. The employees are the business. Make sure key people know they are valued and have a future.
• Grow. Identify the 2-3 highest-impact growth levers and focus exclusively on those.

The best ETA operators resist the urge to "fix everything" in month one. You bought a business that works. Your job is to make it work better, not to rebuild it from scratch.