94 search funds launched in a year as MBAs buy their way to CEO
Business school graduates in the US are borrowing to buy established small firms and appoint themselves boss. One doubled her company in two years. Another closed his and filed for personal bankruptcy.
The route runs like this. A graduate sets up what is called a search fund, raises money from institutional investors and wealthy individuals, hunts for an established small business whose owner wants out, buys it, and takes the top job.
The label is entrepreneurship by acquisition. The borrowing runs to hundreds of thousands of dollars.
A record 94 search funds were launched in the United States in 2023, according to a count cited by the BBC. Some $682m (£505m) went into funds and the companies they bought across 2022 and 2023.
Investment firms have grown up around the practice. Search Fund Partners, Aspect Investors and Anacapa Partners all back young buyers.
What draws them is returns. A report by Yale School of Management described "juicy returns by any standard" and found the funds generally "remained relatively stable".
Ania Aliev was 27 and finishing an MBA at the Tuck School of Business at Dartmouth College when she closed her deal in late 2023. She was in a hospital bed waiting to be induced, emailing investors who told her to stop.
Three months after giving birth she owned and ran Life Support Systems, a medical equipment business in Massachusetts. She had worked in finance before the MBA and knew how that would look on the shop floor.
Her opening move was to watch rather than instruct. Two years on, at 30, she has bought a competitor, which she says has doubled the size of the business.
Not everyone stayed. Some employees left and Aliev made others redundant, saying they did not want to work in a growth company.
Meaghan Richardson, who has been at the firm a long time, told the BBC it can be challenging but that Aliev has "turned a lot of stuff around".
He was 31 on his first day, which he calls terrifying. Skilled staff left, one of them starting a cheaper competitor and taking an important customer along.
Duncan concluded the company had been built around its previous owner and could not easily be run by anyone else. Covid, cheaper Chinese competition and a flooded workshop followed.
He shut the doors in February 2025, after seven years, and filed for personal bankruptcy. He now works as a consultant and warns "starry-eyed MBAs" who think they cannot fail.
Jacqueline Ackerman, managing partner of Vantage Leadership Consulting in Chicago, says staff resistance is not really about age. "I don't think people actually resist youth. I think they resist uncertainty," she says.
For a founder weighing a buy rather than a build, the arithmetic is the easy part. The typical plan is to grow the business for five to 10 years and sell at a profit — but the debt is personal, and Duncan's case shows where that lands when the business will not comply.