Skip the Startup, Buy a Business: Conference at UVA Darden Spotlights Fast-Track Entrepreneurship

The ascendant nature of entrepreneurship through acquisition (ETA) was on full display at the University of Virginia Darden School of Business in early September. Hundreds of students, alumni and industry participants packed the Abbott Auditorium to learn more about a rapidly growing sector at the annual Southeast Entrepreneurship Through Acquisition Conference (SEETA), hosted by the Batten Institute for Entrepreneurship, Innovation and Technology at Darden in collaboration with partners at Duke Fuqua School of Business, Georgetown University McDonough School of Business, and University of North Carolina Kenan-Flager Business School.

According to speakers at SEETA, the interest in acquiring and operating small businesses has never been higher, with would-be entrepreneurs and investors increasingly seeing the purchase of established small to mid-sized companies as an attractive path to an entrepreneurial career.

The trend is visible at Darden, which now has a popular ETA student club; courses, professors and staff devoted to the field; and a Fellows program offering resources for aspiring searchers.

“We view our work in ETA and this collaboration in particular with other schools, industry partners and our alumni community as a mission-critical part of our focus on ‘big-E’ Entrepreneurship,” said Omar Garriott, executive director of the Batten Institute for Entrepreneurship, Innovation and Technology, calling ETA one of the most direct ways for MBAs to put their business school toolkits to work.

“At Darden we believe that this entrepreneurial mindset and skill set are foundational to leadership in our brave new world, and that the best way to learn fast and to see what you’re really made of is by doing,” said Garriott.

Conference speakers described the space as particularly attractive because there is now an increasingly formalized methodology and approach for operators who want to run a business but may not have their own unique entrepreneurial idea or a personal fortune.

While businesses in this space run the gamut, savvy searchers typically seek simple business models with recurring revenue, high customer retention and so-called mission-critical products. A successful acquisition of the typical ETA target allows talented individuals to step into small businesses with clear upside, ideally creating value and generating attractive returns.

Over the course of two days at UVA, attendees heard keynote addresses from industry leaders, in-depth discussions with searchers and operators, and a variety of tactical sessions on topics such as finding financial backing and conducting targeted searches.

Hundreds of students, alumni and industry participants packed the Abbott Auditorium at Darden in Charlottesville to learn more about entrepreneurship through acquisition.

Operators Discuss Trends, Differentiation in a Hot Field

At a panel devoted to hot topics in ETA, practitioners said their experience on the ground validated reports of momentum in the field.

Ania Aleiv, CEO of Life Support Systems, a company specializing in selling and servicing automated external defibrillators, said she has experienced a “huge uptick” in people reaching out to ask about searching. It’s a group that appears increasingly diverse, she said, with new MBAs alongside many without a traditional business background, as people realize they can buy “any kind of business in any industry.”

“The model is gaining a lot more relevance,” she said.

Bruce Vann (MBA ’13), who bought the theater curtain company LuXout in 2020, agreed.

“Anecdotally, someone is always reaching out to me about search,” said Vann. “My gut feeling is we are not done growing, and I would expect [ETA] to continue to grow substantially in the next couple of years.”

Havell Rodrigues, CEO of New Majority Capital, whose company seeks to make ETA more accessible to underrepresented entrepreneurs, said people with entrepreneurial inclinations are increasingly aware of this path to dynamic leadership.

“If you have an entrepreneurial mindset, you can go the startup route, which has its own failure rate of 70–80%, or you could go down this route, which has a much lower failure rate,” said Rodrigues. “And if you’re a mid-career professional and AI might come for your job and a recession might come for your job, people are realizing they want to be in charge of their own destiny. Why not ETA?”

Moreover, there is ample funding available to get attractive deals done. As more searchers and investors of various kinds flock to ETA, panelists suggested that access to capital was not a bottleneck, provided searchers brought solid deals to the table.

Despite the growth in the space, it still feels like an industry without a ceiling due to the enormous number of small to mid-sized businesses in the United States and ongoing generational turnover in ownership, according to panelists. And while competition among searchers is increasing, there remains significant opportunity for talented individuals with the resilience to sift through hundreds of leads.

“You have to have a lot of grit in order to acquire [a company] in the first place,” said Vann. “And if there’s more competition among buyers, outwork them.”

Aleiv and Vann both emphasized leaning into humanity while searching for the right deal. Aleiv said she ran a geographically focused search and emphasized her connection to the community when reaching out to prospects.

“As a searcher, you’re never going to be the biggest check,” said Aleiv. “You want to find the person that’s going to want to sell because they want to sell to you, and that’s going to be different for every single person.”

Vann agreed, noting that those who show up as genuine people — rather than an archetype of what a buyer is supposed to look or sound like — can truly differentiate themselves in a crowded search field and pave the way for a mutually agreeable transaction.

The lean-in to humanity in the searching process may be particularly beneficial as a suite of AI tools eases many of the once onerous aspects of lead-generation and outreach.

While AI is disrupting elements of the field in the near-term, Saumil Jariwala, founder of the search fund Feta Fund, said certain fundamentals are unlikely to shift in the near-term.

“We will continue to see great returns, just like we’ve seen for over four decades,” said Jariwala.  “And we’ll continue to have entrepreneurs that have life-changing, transformational experiences running their businesses.”

Conference Brings Together Seller and Buyer for Candid Discussion

The SEETA conference also brought together a successful buyer and seller for an informal discussion moderated by Batten Director of ETA Megan McGee (MBA ’21) on sourcing a successful deal and growing a venture after the founder cedes control.

Jared Lenner (MBA ’22), now CEO of the tutoring company Grade Potential, said he came to Darden knowing he was probably not cut out for traditional corporate life, and looking for an opportunity where he could bet on himself. Lenner connected with Search Fund Accelerator founder Tim Bovard during an ETA course at Darden and said he was struck by Bovard’s claim that there was essentially “no downside” to partnering with the search fund.

With the support of SFA, Lenner began the arduous job of searching for a business, initially homing in on companies that trim trees around power lines before abandoning the idea for one that felt more personally resonant — and where he believed he could add value.

Lenner said he began sending thousands of cold-call emails focused on the tutoring and daycare sectors.

Among the many emails Lenner sent, one reached a receptive David Serwitz, who had started Grade Potential Tutoring as a college student frustrated with his own tutoring experience. Serwitz recounted steadily growing the company — which specializes in in-person tutoring — over the course of more than 20 years, essentially figuring out what worked as he went along, with plenty of “lows” alongside the occasional high.

As a second venture, FloSports, began attracting more of his time and interest, Serwitz said he realized he was ready to move on from his first venture, eventually hiring an investment bank to help prepare the business for sale.

Serwitz, who said he came very close to deleting Lenner’s email, having recently had a poor experience with prospective buyers who developed cold feet, instead replied that he had hired an investment bank and could send him more information.

Serwitz’s business turned out to be sound, the pair hit it off, and they eventually signed a letter of intent. The deal closed successfully with Serwitz maintaining an equity stake and stayed on as managing partner. Lenner said the transaction succeeded in part because both individuals committed to keeping direct lines of communications open and quickly addressing the inevitable hiccups and miscommunications that occur during complex transactions.

“We assumed positive intent of each other … and it saved the deal a handful of times,” Lenner said.

Lenner entered the company with a 100-day plan, which he scrapped on Day 3, and encouraged attendees to have a plan but remain flexible.

The pair said the ongoing partnership was proving beneficial personally and professionally, with Lenner tapping into the expertise of the person who knew the business best, and Serwitz seeing the company he founded evolve into an increasingly data-driven operation led by a new generation of talent.

“I’m having a lot more fun than I did,” Serwitz said. “Rolling the equity in and still getting to be a part of [the business] has been super awesome.”

Lenner, meanwhile, has overseen the hiring of a CFO, COO and data engineer, and said the company had its best week in history the prior week.

“We are doing really well,” said Lenner. “Dave sold me a really, really good company and I’m grateful for the faith that SFA put in me.”

“You’re doing a great job,” Serwitz responded.