Home / Business and Economy / CEO by 27: Hospital Bed to Boardroom Buyout
CEO by 27: Hospital Bed to Boardroom Buyout
3 Sep
Summary
- Young MBA graduates are increasingly buying established firms.
- This practice, known as entrepreneurship by acquisition, uses search funds.
- Investors are attracted by high reported rates of return from these ventures.
A new wave of entrepreneurialism is emerging among recent MBA graduates in the US, characterized by the acquisition of established companies. This approach, termed entrepreneurship by acquisition or search-fund investing, allows aspiring leaders to bypass traditional career paths and immediately assume leadership roles. A prime example is Ania Aliev, who, at 27 and shortly after graduating from Tuck School of Business, purchased medical equipment firm Life Support Systems.
This method involves setting up a 'search fund' to attract capital from institutional investors and wealthy individuals. The practice saw a significant surge in 2023, with a record 94 search funds launched in the US. These funds collectively attracted $682 million in investments across 2022 and 2023. Specialized investment firms now exist to support these young entrepreneurs and their search funds.
While some may question placing young individuals in charge of established businesses, reports suggest that these ventures can yield "juicy returns." A Yale School of Management study indicated that funds generally remained stable and offered substantial profitability, attracting investors seeking high rates of return.
