- Why MBA graduates make ideal acquisition entrepreneurs
- $10T in baby boomer owned businesses will be up for sale in next 20 years
- How the Acquisition Entrepreneur career path differs from more traditional ones
- Why MBA grad should bet on themselves and buy a business
MBA graduates can learn a lot of real-world, practical business skills by becoming acquisition entrepreneurs, helping them gain more financial independence than traditional career paths would give them.
They can apply all the business management knowledge they’ve learned in school towards buying and operating an existing business, giving them a leg up over their competition.
However, this isn’t simply a one-way street since the MBA gives the entrepreneur several advantages. It provides a network of classmates and alumni who can advise and act as a sounding board for possible ventures. Not to mention that having an MBA is valued by potential lenders and investors.
Let’s take a look at what MBA graduates can learn from acquisition entrepreneurship.
MBA helps in the Loan Application Process
Most MBA programs touch on many subjects but don’t delve deep enough into the acquisition entrepreneurship side of things, says Chris Mooney, head of investor relations at Acquira and fund manager of Acquira Capital.
“You may get a presentation from the local SBA office, and you may get introduced to a few brokers who are guest speakers during class,” says Chris, who received his MBA from the prestigious Rice University in Texas. “But at the end of the day, there really is no practical application of those concepts.”
And it’s hard to gain the skills and knowledge necessary to become a successful acquisition entrepreneur without getting your hands dirty. Acquira's Accelerator Program was largely designed to help fill that knowledge gap.
Still, an MBA graduate brings a level of education about the general operation of a business that can be an essential tool for the would-be acquisition entrepreneur, says Chris.
“Those are all the skills you need to actually run and own your own business, that’s the key thing,” he says.
An MBA can also be very helpful because it looks good on a loan application. All things being equal, a bank will likely choose the graduate over someone who doesn’t have the same education.
“We're talking about the optics of a lender looking at an application,” Chris says. “And if they had two exact candidates, except one had an MBA and the other one didn't – so financially identical – there is a level of probability that the bank will perceive the MBA candidate as lower risk.”
That could also mean a slightly lower interest rate on the loan, making it cheaper for the MBA graduate to run the business.
$10T in Small Business Assets to Change Hands
This news is good for MBA graduates looking to buy a small business.
Add to that the fact that the U.S. is going through a massive transfer of wealth as baby boomer small business owners move towards retirement, many without any succession plan in place.
According to the California Association of Business Brokers, about 12 million of these businesses will change hands over the next two decades. That’s about $10 trillion in assets.
The SBA attempts to ease this transition by offering cheap loans to would-be acquisition entrepreneurs. MBA graduates are uniquely placed to secure these loans.
Acquira’s MBA-level Training
None of this should preclude non-MBA holders from pursuing a career as an Acquisition Entrepreneur (AE). Many highly successful entrepreneurs have no formal business training and have learned how to succeed by simply getting their hands dirty.
As we mentioned earlier, Acquira’s Accelerator course is designed to give anyone the skills necessary to close an instantly cash-flowing business within seven months, whether they have an MBA or not.
This mergers-and-acquisition training is much more practically minded than the general knowledge of an MBA.
Acquira can help anyone learn about developing an investment thesis, how to conduct due diligence, and how to weigh risk in an investment with its MBA-level training. It will also show you how to transition from an owner-operated business to a management-run one, which can help increase profit and growth.
A relationship with Acquira has also proven beneficial when seeking an SBA loan from a bank. By this point, most lenders know who we are and that we work with good people. Every AE who has come through our program who has wanted an SBA loan has gotten one.
Traditional Career Paths vs Acquisition Entrepreneurship
The conventional wisdom is that MBA graduates can pursue two traditional paths. You can get yourself hired, put your head down, and work until you make the C-suite. Or you can launch a start-up.
The third option is buying and operating an existing business. This is often overlooked but, in many ways, might be the more attractive option. The vast majority of startups ultimately fail. According to figures released by the U.S. Bureau of Labor Statistics in 2021, 20 percent of new businesses fail within the first year, half within five years, and 65 percent after ten years. Purchasing and operating an already profitable business is generally less risky.
Working your way up the corporate ladder is also less of a sure thing.
According to the National Association of Colleges and Employers, MBA graduates generally make about $20,000 more per year than their colleagues.
That’s not too bad.
However, it is a fallacy that working for someone else is the safer option, says Chris, given that nowadays, people often lose their jobs to get rehired again by another company or simply switch careers many times over their lifetime.
It’s unlikely that someone will work at one company for their whole career.
It’s also very unlikely that any MBA graduate will actually become CEO of a Fortune 500 company or any company. There are very few of those jobs and lots of grads.
AT&T has around 200,000 employees but only one CEO, says Chris. There’s no guarantee that working hard will net you that top position.
“Now, one person eventually does,” says Chris. “So the probability that AT&T will have a CEO is 100%. The probability it will be you is close to zero.”
Bet on Yourself Instead
Instead, according to Chris, MBA graduates should think about the freedom of working for themselves. They should bet on themselves and buy a business so the fruits of their work accrue to themselves.
I'd rather bet on myself – buy a business. You control it. The fruits of your work accrue to you, no one else. And when you work 50 hours, you get 50 hours of effort reinvested into your business.
“As an employee, you're getting paid for 40 hours of work. If you work 50 hours, no one really cares, and all the extra benefit of that work goes to the company's owners, not you,” says Chris. “At best, you get a little extra in your bonus check. But does that really ever happen in a meaningful way?”
The numbers would certainly seem to bear this out, as small businesses make up the vast majority of all businesses.
According to data released by the SBA in 2022, there are 33.2 million small businesses (defined as having fewer than 500 employees).
These businesses employ about 62 million Americans, accounting for two-thirds of all employment growth over the last 25 years.
MBA graduates also have the baseline knowledge and skills to grow their operations and expand, either by purchasing local competitors or diversifying into new industries. This could lead to a sizable business portfolio with income rivaling that of CEOs of much larger operations.
“You can also work your way up, buying a small business, acquiring others to grow until it’s a much larger operation,” says Chris. Buying additional businesses is a way for acquisition entrepreneurs to give themselves a big promotion. And it’s a lot more fun than subjecting yourself to a popularity contest and corny interview process at your current employer.
Nimble learners trained in management practices
MBA graduates can run businesses in industries that they are not uniquely familiar with. They can apply their general knowledge about how businesses run in any setting, whether that is buying an HVAC business or a bakery.
“You are a nimble learner who has been trained formally in management practices,” says Chris. “And we know general management practices are applicable in any business.”
That isn’t always the case, and some familiarity is essential.
“It doesn't take that long for the new owner to develop that subject matter expertise. So, the window of risk is rather narrow,’ says Chris.
Getting some experience in the industry can be extremely helpful in operating a successful business, says Chris.
You should treat your employees like an asset just as you do your customers – and knowing what they experience daily can be very helpful.
If you want to buy an HVAC company, consider taking courses in becoming an HVAC technician. You can also go for a more simple approach.
“Grab a wrench and hop in the truck,” says Chris. Ride-alongs are a great way to learn the business and get to know your new team.
A thirst for knowledge
A thirst for knowledge is what makes a good MBA candidate and a good acquisition entrepreneur, says Chris.
The ideal acquisition entrepreneur is someone who is always learning and trying new things. A person who is interested in all aspects of a business.
This attitude can translate to your employees.
“If you're not modeling a culture of learning innovation, it's not going to translate to your teams,” says Chris. “And you end up with a stagnant workforce that isn't innovating. You're probably going to have above-market churn, you're going to have low employee satisfaction, and you're not going to be driving profitability as a result.”
MBA graduates make ideal candidates for acquisition entrepreneurship.
They have the general business skills to operate a wide variety of businesses, meaning they can acquire just about any of the tens of millions of small businesses that will change hands over the next twenty years.
Having an MBA looks good on a loan application, meaning they have slightly easier access to capital through SBA loan programs. A bank might be more willing to take a risk on someone with an MBA compared to someone else who doesn’t, everything else being equal.
Instead of working up the corporate ladder or trying to launch a startup, MBA graduates should strongly consider the third path of acquisition entrepreneurship.
Acquira’s training focuses on the practical aspects of finding and closing on a small business – and much more so than the average MBA program. The program is equally suitable for anyone who wants to circumvent the process of getting an MBA and start getting their hands dirty right away. If you’re interested in becoming a small business owner, the first step is to apply for the Accelerator Program. If you’d like to learn more about how we can help you find and close a business within seven months, schedule a call with one of our representatives through the form below. We can help walk you through purchasing a business using an SBA loan.
Are you an MBA graduate who is considering acquisition entrepreneurship? If so, let us know in the comments below.
- MBA graduates are uniquely qualified to become acquisition entrepreneurs
- Acquisition entrepreneurship lets them gain some practical experience
- Having an MBA can help during the loan application process
- Hardly anyone gets to be the CEO of a Fortune 500 but everyone could become the CEO of their own business
Acquira is a business acquisition in a box service. We help entrepreneurs buy businesses and we invest in them and their chosen businesses. We are here to help ensure that each business we work with is posed to make the biggest positive impact possible for its owners, employees, and community.