Educating yourself on ETA
The number of educational resources available on ETA is vast but overwhelming. Start here to prepare for your journey as a searcher.
The ETA community is not short of content by any means - professors, investors, entrepreneurs, and searchers all frequently publish content. When I was formally introduced to the space at the beginning of business school, I found it overwhelming to navigate, especially since some of the content was duplicative. Since then, I’ve found myself returning to the same set of resources that initially built my foundation.
If you are new to ETA and found the Overview of ETA article fascinating, then Maverick’s 5 Must-Read Guides for Beginners will fill many gaps that I could not cover in my last piece. The guides discuss the basics of search funds and ETA more broadly, covering the history, models, processes, economics, trends, personal development, and more. For MBAs and those interested in international ETA, I’ve put together additional guides that are necessary to read.
Maverick’s 5 Must-Read Guides for Beginners
HBR’s Guide to Buying a Small Business
One of the most enjoyable books I have ever read, HBR’s Guide to Buying a Small Business, by Richard S. Ruback and Royce Yudkoff. It provides a comprehensive overview of ETA with anecdotes from former searchers and current entrepreneurs. The book walks you through the entire process of ETA in a flowing, sequential manner, and for the $10 investment, it is the perfect place to build a basic understanding of search funds and ETA more broadly.
Search Fund Primer | Stanford GSB
The Stanford Search Fund Primer is THE most important and referenced document in the community. This 65-page report, revised annually, provides further detail for those looking to deepen their understanding of search funds with seven different parts, 27 exhibits, and a suite of sample legal documents to provide you with practical support. The seven distinct sections are on the following topics: personal reflection before pursuing search, fundraising, search fund economics, evaluating industries, the search process, evaluating companies, and general management of the acquired business. I recommend that you only read this document after reading HBR’s Guide to Buying a Small Business to understand the concepts in this report fully.
The Evolution of Entrepreneurship Through Acquisition | Chicago Booth
Though there is some overlap with the Stanford Search Fund Primer, The Evolution of Entrepreneurship Through Acquisition provides further perspective on the different ETA models and detailed insight into investors’ views on the industry. As the title suggests, the report nicely articulates how ETA has grown into its current form and, more specifically, the changes in the past decade. For those who would eventually like to raise capital, the insights from the investor conversations can help entrepreneurs better understand investor objectives and best position themselves for success. Pay close attention to understanding the horse/trainer/jockey metaphor in the context of ETA, a concept I will discuss in further detail in a future post.
Search Fund Study: Selected Observations | Stanford GSB
The financial consequences of pursuing ETA are significant, both on the upside and downside. The Selected Observations study, revised annually by Stanford, analyses the performance and key factors of over 400 search funds. One can also find detail into search fund activity by year, financial returns for both searchers and investors, the profile of searchers, the types of deals they pursued, and other descriptive factors that will help educate you on the natural probabilities embedded in the career path along with the prototypical searcher.
Search Funds: Death and the After Life | Stanford GSB
After reading the previous four guides, you might get the sense that it’s relatively straightforward to search, buy a business, and exit with a successful outcome. After all, two-thirds of all search funds conclude in a transaction, and 75 percent of those earn a positive return, essentially giving you a 50/50 chance of having a positive outcome. I found Search Funds: Death and the After Life to provide the harsh reality on the other side of pursuing the path. The report provides a systematic view of common characteristics underlying unsuccessful search funds and the consequences for those entrepreneurs. Understanding these will help you with industry selection, board composition, and, more generally, considering whether the career path is right for you.
For MBAs considering ETA
A Framework to Contemplate Post-MBA Career Paths | Yale SOM
This report provides a more general framework for MBAs to consider regarding the type of role they should pursue after graduation. A prominent figure in the ETA community, A.J. Wasserstein, breaks down the types of roles into four categories: operator/entrepreneur, capital provider, advisor, and human input. Any current MBA should go through the exercises posted to validate their desire to pursue a career in entrepreneurship during their initial soul searching phase. Try to remove social expectations when considering your career path and focus on what will truly make you happy in the long – a challenging task to undertake.
How to Prepare for a Search Fund During Your MBA | Yale SOM
Under the assumption that you have entered your MBA and looking to pursue ETA after graduation, How to Prepare for a Search Fund During Your MBA provides tactical advice that anyone can quickly implement. I found this report to be of great use, as I used the frameworks for contacting search fund entrepreneurs to validate my choice to go as a single, traditional funded searcher. The report was also helpful in consolidating many necessary ETA-related case studies, investors, and perspectives from those in the field.
International ETA
International Search Fund Study: Selected Observations | IESE Business School
Are you pursuing an international search? The Selected Observations report, revised bi-annually by IESE Business School in Spain, provides an international flavor to the Stanford Selected Observations report discussed in #4. Data on searches conducted by country, year, and industry can be helpful starting points for those interested in pursuing a search in an international market.
Do you know someone interested in ETA but in the early stages of learning about the career path? Share a link to them, and don’t forget to have them subscribe for first access to future Maverick posts.