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They Skipped Corporate America—And Bought A Company Instead. Meet The New CEO Fast-Track

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They Skipped Corporate America—And Bought A Company Instead. Meet The New CEO Fast-Track

Dan Schweber was enrolled in Columbia University's executive MBA program back in 2019. Disillusioned with corporate life and not in a financial position to launch his own company, Schweber was uncertain what his future would look like.

Until he caught wind of a week-long elective intensive that focused on search funds. These funds, he learned, provided a path into small business entrepreneurship through the acquisition of already-established companies.

By the end of the first day of the course, Schweber was hooked. "I couldn’t believe it,” he told Business Insider. “I was like, I can do this.”

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Today, Schweber, who is the CEO of an Atlanta-based 60-person air duct cleaning company, is one of a growing number of search fund entrepreneurs.

Search funds provide a unique pathway to a corner office. They work like this— instead of raising capital to build a product or prove an idea, entrepreneurs will use that money to buy an already established, successful business and then install themselves as the new owner/CEO. 

The country is chock-full of businesses that meet this criteria, many of which are owned by Boomers looking to retire, making it a win-win situation for both parties. The catch, Business Insider reports, is that many of these opportunities are in the less-exciting corners of the economy, like plumbing, dumpster rentals, and pool construction.

The concept is not new. Business Insider reports that it dates back to the 1980s, but really took off in the post-pandemic years as dreams of climbing the corporate ladder began to look less appealing.

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For many, like Schweber, the decision to opt out of the rat race and into small business ownership is a life-changing one. 

"It’s just the best," he told Business Insider. "I will never work in a corporate job ever again. There’s no amount of money that you could give me.”

However, Schweber warns that it isn't necessarily an easy route, nor is it something that can happen overnight.

Typically, it takes a search fund entrepreneur two years and thousands of cold calls to current owners to find the right fit. In the end, about one-third of searchers never end up buying a business, either because they get discouraged by the process or because they're unable to make the right match.

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Once a searcher closes the deal and buys a company, the work is only beginning. According to Business Insider, 31% of searchers wind up losing money for their investors, and many more find themselves kicked to the curb after proving themselves unable to hack it as CEO. 

Even those who manage to hold on to their position and keep the company afloat may not see any payout when it comes time to sell. Just under 25% of searchers earn no profit when they eventually sell their acquired business, and only 18% earn eight figures.

But for the successful few, like Schweber, the risk and the workload are well worth it.

“You’ve got to be all in,” he told Business Insider. “If you have the safety of a job, you’re never going to need it enough. You’ve got to burn the boats.”

Read Next: Are you rich? Here’s what Americans think you need to be considered wealthy.

Image: Shutterstock

 

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