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Entrepreneurship Through Acquisition (ETA) in 2026: How to Buy a Business and Run It

Quick Answer

Entrepreneurship through acquisition (ETA) is becoming an entrepreneur by buying an existing profitable business and running it, rather than starting one from scratch. The main paths: a traditional (funded) search fund, where investors fund a ‘search phase’ (typically 2 years) during which the searcher looks for a business to buy, then fund (and take a majority of) the acquisition; a self-funded search, where the searcher uses their own capital plus an SBA 7(a) acquisition loan and a seller note to buy a business, keeping more equity but bearing more personal risk; an accelerator or sponsored search, where a firm provides search support and capital; and a ‘long-term hold’ or holdco path, where the operator keeps building rather than exiting. Typical ETA targets: profitable, stable, owner-operated businesses with $1M-$5M+ of EBITDA (smaller for self-funded SBA deals), in unsexy but durable industries, where the owner is retiring or otherwise motivated. The economics: in a funded search, the searcher typically ends up with ~20-30% equity (vested over time and tied to performance hurdles); in a self-funded SBA deal, the searcher can own most or all of the equity but takes on a personal guaranty and a leveraged balance sheet. The process: raise (or arrange) capital, search and source targets, evaluate and negotiate, finance, close, then operate, the operating phase is the point. ETA is hard, the search can fail, the business can underperform, but for the right person it’s a faster path to owning and running a meaningful business than founding one.

Entrepreneurship through acquisition, ETA, is the path to becoming an owner-operator by buying a business instead of building one, and it’s grown from a niche MBA-program concept into a mainstream way to acquire and run a meaningful business. Whether through a funded search fund, a self-funded SBA deal, or a sponsored search, the core idea is the same: skip the startup risk, buy something that already works, and create value by running it well. This page covers the ETA models, the economics, the process, and what it actually takes.

We are CT Acquisitions, a buy-side M&A advisory firm, we source and screen acquisition targets for searchers and other acquirers. For related material, see how to finance a small business acquisition, SBA 7(a) loan to buy a business, business acquisition strategy, how to source acquisition deals, how to find businesses for sale, leveraged buyout for a small business, holding company acquisition strategy, and the 100-day plan after acquiring a business. CT also has extensive material on search funds from the seller’s perspective, see our existing search-fund guides.

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What this guide covers

ETA = becoming an entrepreneur by buying an existing profitable business and running it, rather than starting one
Paths: traditional (funded) search fund; self-funded search (own capital + SBA loan + seller note); accelerator/sponsored search; long-term-hold / holdco path
Typical targets: profitable, stable, owner-operated businesses with $1M-$5M+ EBITDA (smaller for self-funded SBA deals), in unsexy but durable industries, with a retiring or motivated owner
Economics: funded search, the searcher ends up with ~20-30% equity (vested, performance-tied); self-funded SBA deal, the searcher can own most/all equity but takes on a personal guaranty and leverage
Process: raise/arrange capital → search and source → evaluate and negotiate → finance → close → operate (the operating phase is the point)
ETA is hard, the search can fail, the business can underperform, but for the right person it’s a faster path to owning a meaningful business than founding one

The ETA models

Model	How it works	Searcher’s typical equity	Best for
Traditional (funded) search fund	Investors fund a ‘search phase’ (typically ~2 years) during which the searcher looks for a business; then those investors (often with rights to participate pro rata) fund the acquisition and take a majority of the equity. The searcher earns equity through a ‘stepped vesting’ structure tied to time and performance hurdles.	~20-30% (vested over time, with portions tied to return hurdles)	Searchers who want institutional backing, a salary during the search, and a deeper network of experienced investors, in exchange for less equity
Self-funded search	The searcher uses their own capital (the equity injection) plus an SBA 7(a) acquisition loan and a seller note to buy a business, no search-phase funding, no investor majority. The searcher owns most or all of the equity but bears the personal guaranty and the leveraged balance sheet.	Most or all of the equity (often 60-100%, depending on whether they bring co-investors)	Searchers with enough capital for the SBA equity injection, a tolerance for personal risk (the guaranty), and a desire to keep most of the equity, often targeting smaller businesses (under the SBA limit)
Accelerator / sponsored search	A firm provides search infrastructure, capital, and support (sometimes a small stipend, sometimes office space, sometimes a structured program), in exchange for a piece of the eventual deal.	Varies; typically more than a funded search fund’s searcher equity, less than a self-funded searcher’s	Searchers who want structure and support without giving up as much equity as a traditional fund, or who don’t have the capital for a fully self-funded search
Long-term-hold / permanent-equity	The operator acquires a first business (via any of the above), then, rather than exiting, uses its cash flow to acquire more, becoming a holdco. Requires long-term-oriented capital. See holding company acquisition strategy.	Evolves over time as the holdco grows	Operators who’d rather keep building than flip and start over

What ETA searchers target

Profitable and stable. ETA isn’t a turnaround strategy, searchers want a business that already works, with consistent revenue and earnings, not one that needs fixing or a growth spurt to justify the price.
The right size. Funded search funds typically target $1M-$5M+ of EBITDA (sometimes larger). Self-funded SBA deals are usually smaller, the SBA loan limit caps the deal size, and the searcher’s equity injection is what they can afford.
‘Unsexy’ but durable. The classic ETA target is a boring, essential business, B2B services, niche distribution, specialty manufacturing, certain healthcare and home services, with recurring or repeat revenue and a defensible position, not a trendy, competitive, fast-changing one.
A motivated, transition-friendly owner. A founder who’s retiring, has a succession gap, or is burned out, and who’s willing to do a real transition (introduce customers, transfer knowledge, stay on as a consultant for a period).
Manageable complexity. A business the searcher can actually learn to run, not one requiring deep technical or industry-specific expertise the searcher doesn’t have (or a strong existing management team that fills the gap).
Low customer concentration and reasonable owner-dependency. A business that doesn’t collapse if a key customer or the departing owner leaves, the searcher needs the cash flow to be durable through the transition.
A defensible price. The deal has to make sense on the cash flow, especially in a self-funded SBA deal where the leverage is significant.

The economics

Funded search fund: investors fund the search (giving the searcher a salary for ~2 years) and the acquisition (taking a majority of the equity). The searcher earns equity through stepped vesting, typically a base tranche that vests over time (often a few years), plus additional tranches that vest only if the eventual return clears performance hurdles (multiples-of-invested-capital or IRR thresholds). The searcher’s total equity, if all tranches vest, commonly lands around 20-30%. Investors get the rest, plus their capital back with a preferred return before the searcher’s performance tranches kick in. The searcher gives up equity in exchange for backing, a salary, and a network.
Self-funded SBA deal: the searcher uses their own capital for the SBA equity injection (~10% of the project cost, part of which can be a standby seller note), takes on the SBA loan (with a personal guaranty, often a lien on their home), and a seller note. The searcher owns most or all of the equity, but bears the leveraged balance sheet and the personal risk. The return is highly leveraged, the upside is amplified, and so is the downside. See SBA 7(a) loan to buy a business and leveraged buyout for a small business.
The operating salary: in both models, the searcher becomes the CEO and draws a salary from the business, modest at first (the business has to cover debt service), growing as the business grows.
The exit (if there is one): in a traditional search fund, the investors expect an exit (a sale, a recap) over a hold period, typically 5-10 years, that’s when the searcher’s performance tranches pay off. In a self-funded deal, the searcher can exit when they want, or hold indefinitely (the long-term-hold path).

The process

Raise or arrange capital. Funded search: raise a search fund from investors (typically a group of experienced ETA investors and operators). Self-funded: line up your equity, get pre-qualified with an SBA-preferred lender.
Search and source. Build a target list (industry, size, geography, owner situation), run proprietary outreach to owners, work broker and advisor relationships, screen the funnel. Expect to review 50-100+ opportunities for every acquisition that closes. This is the longest phase, often 1-2 years for a funded search. See how to source acquisition deals and how to find businesses for sale.
Evaluate and negotiate. Quick-screen the candidates, do diligence on the serious ones (financial, including a quality-of-earnings review; legal; operational), negotiate the LOI and the definitive agreement. See business acquisition strategy.
Finance and close. Funded search: the search-fund investors (and any co-investors) fund the acquisition equity; arrange senior debt and a seller note. Self-funded: close the SBA loan, the seller note, and your equity injection. See business acquisition loan.
Operate. The point of ETA. Run the business, retain the team and customers through the transition, execute a 100-day plan (quick wins, financial reporting, team assessment, strategic priorities), and grow the business over time. See the 100-day plan after acquiring a business.
Exit, or keep building. In a funded search, work toward an exit on the investors’ timeline. In a self-funded deal, exit when you want, or use the cash flow to acquire more (the long-term-hold / holdco path).

How we know this: the ranges, structures, and dynamics on this page come from the acquisitions we work on and the buyer mandates in our network of 100+ active capital partners, plus the founder-owned businesses we source for them. They are informed starting points, not guarantees, the specifics of your deal control your outcome. For owners weighing a sale, our free 90-second valuation tool gives a sector-adjusted estimate.

What it actually takes

The willingness to do an unglamorous job. ETA means running a boring, essential business, B2B services, niche distribution, specialty manufacturing, not founding the next big thing. The reward is owning a real, cash-generating business; the price is doing the work.
The discipline to search well. Most of the search phase is rejection, opportunities screened out on price, owner-dependency, customer concentration, financeability. The searchers who succeed treat sourcing as a relentless funnel, not a wait for the perfect deal.
The judgment to buy well. Don’t over-pay (especially in a leveraged self-funded deal); don’t buy a business you can’t run; don’t ignore the diligence red flags. A bad acquisition is hard to recover from.
The operating capability to run it. The value-creation is in the operating phase. A searcher who can’t actually run the business, learn it, lead the team, make decisions, manage the cash, won’t create value regardless of how well they bought.
The tolerance for the risk. Funded search: the search can fail (no acquisition) or the business can underperform. Self-funded: add a personal guaranty and a leveraged balance sheet to that. ETA is not low-risk; it’s lower-risk than founding a startup, but it’s not safe.
The right support. A transactional M&A attorney, a CPA, an SBA-preferred lender, and (for sourcing) a buy-side advisor or your own relentless outreach. CT sources and screens targets for searchers; the buyer engages and pays us.

For financing, see SBA 7(a) loan to buy a business, business acquisition loan, and how to finance a small business acquisition; for the leveraged structure, leveraged buyout for a small business; for sourcing, how to source acquisition deals; for the long-term path, holding company acquisition strategy. If you’re an owner being approached by a searcher, our free valuation tool tells you what your business is worth, and CT has extensive material on selling to a search fund from the seller’s perspective.

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Frequently asked questions

What is entrepreneurship through acquisition (ETA)?

Becoming an entrepreneur by buying an existing profitable business and running it, rather than starting one from scratch. The main paths: a traditional (funded) search fund, where investors fund a search phase and then the acquisition, taking a majority of the equity while the searcher earns ~20-30% through performance-tied vesting; a self-funded search, where the searcher uses their own capital plus an SBA 7(a) loan and a seller note, keeping most of the equity but bearing a personal guaranty and leverage; an accelerator or sponsored search, where a firm provides search support and capital; and a long-term-hold path, where the operator keeps building rather than exiting. ETA is a faster path to owning a meaningful business than founding one, but it’s not low-risk.

What’s the difference between a funded search fund and a self-funded search?

In a funded (traditional) search fund, investors fund a search phase (typically ~2 years, giving the searcher a salary) and then fund the acquisition, taking a majority of the equity; the searcher earns ~20-30% of the equity through stepped vesting tied to time and performance hurdles. The searcher gives up equity in exchange for backing, a salary during the search, and an experienced investor network. In a self-funded search, the searcher uses their own capital for the SBA equity injection plus an SBA 7(a) loan and a seller note, no search-phase funding, no investor majority; the searcher owns most or all of the equity but bears the personal guaranty and the leveraged balance sheet, and typically targets a smaller business.

What kind of business should I buy for ETA?

A profitable, stable, owner-operated business, ETA isn’t a turnaround strategy, you want something that already works. The classic target: an ‘unsexy’ but durable business (B2B services, niche distribution, specialty manufacturing, certain healthcare and home services) with recurring or repeat revenue, a defensible market position, low customer concentration, reasonable owner-dependency, manageable complexity (you can learn to run it), a motivated transition-friendly owner (retiring, succession gap, burned out), and a defensible price. Funded search funds typically target $1M-$5M+ of EBITDA; self-funded SBA deals are usually smaller (capped by the SBA loan limit and what equity injection you can afford).

How much equity does a searcher get in a search fund?

In a traditional (funded) search fund, the searcher typically earns around 20-30% of the equity, but it’s structured as stepped vesting: a base tranche that vests over time (often a few years), plus additional tranches that vest only if the eventual return clears performance hurdles (multiples-of-invested-capital or IRR thresholds). So the searcher’s full ~20-30% only materializes if the deal performs well. The investors get the rest, plus their capital back with a preferred return before the searcher’s performance tranches kick in. In a self-funded SBA deal, by contrast, the searcher can own most or all of the equity (often 60-100%), but takes on the personal guaranty and the leveraged balance sheet.

How does the ETA process work?

Five phases: (1) raise or arrange capital, raise a search fund from investors (funded search), or line up your equity and get SBA pre-qualified (self-funded); (2) search and source, build a target list, run proprietary outreach, screen the funnel (expect 50-100+ opportunities per acquisition that closes; this is the longest phase, often 1-2 years for a funded search); (3) evaluate and negotiate, quick-screen, do diligence (financial, including a quality-of-earnings review; legal; operational), negotiate the LOI and definitive agreement; (4) finance and close, fund the acquisition equity, arrange senior debt and a seller note; (5) operate, run the business, retain the team and customers through the transition, execute a 100-day plan, grow over time. The operating phase is the point.

Is ETA risky?

It’s lower-risk than founding a startup, you’re buying something that already works rather than building from zero, but it’s not safe. The risks: in a funded search, the search can fail (you spend ~2 years and don’t find an acquisition), or the business can underperform (you bought it, but it doesn’t generate the expected return). In a self-funded SBA deal, add a personal guaranty (often a lien on your home) and a leveraged balance sheet to that, the leverage amplifies the downside as well as the upside. ETA rewards buying well (a stable business at a fair price), running it competently, and managing the leverage; it punishes the opposite. It’s a serious commitment, not a low-risk side bet.

Can ETA lead to a holding company?

Yes, and it increasingly does. A searcher acquires a first business to operate; if it performs well, rather than exiting (the traditional search-fund endgame), the operator uses its cash flow to acquire a second business, then a third, becoming a holdco by accretion, the ‘long-term-hold’ or ‘permanent-equity’ path. This requires a shift in mindset (from ‘buy, improve, exit’ to ‘buy, improve, hold, compound’) and often a different investor base (long-term-oriented capital rather than search-fund investors expecting a defined exit). It’s become a popular path among ETA operators who’d rather keep building than flip and start over. See our holding company acquisition strategy guide.

What support do I need for an ETA acquisition?

A transactional M&A attorney (to draft and negotiate the LOI, the purchase agreement, the seller note, and the ancillary documents); a CPA (for tax structuring and diligence support); an SBA-preferred lender (for a self-funded deal) or your search-fund investors plus a senior lender (for a funded deal); a quality-of-earnings provider (for diligence on larger deals); and, for sourcing, either a buy-side advisor (who sources and screens targets against your thesis) or your own relentless proprietary outreach. CT sources and screens targets for searchers; the buyer engages and pays us. Don’t try to do it all yourself, the search, the diligence, the financing, the legal work, and the operating prep are too much for one person.