Entrepreneurship Through Acquisition (ETA) is a path to business ownership where an individual acquires an existing company instead of starting one from scratch. In most ETA transactions, the buyer steps in to operate and grow a business that already has customers, employees, revenue, and established operations.
ETA has become increasingly relevant in the United States due to the large number of baby boomer business owners approaching retirement age. According to McKinsey, approximately six million small and medium-sized businesses are expected to face ownership transitions by 2035. More than one million of those businesses are considered viable candidates for sale or succession, representing up to $5 trillion in enterprise value.
Why does ETA Matter?
Small businesses are a major part of the US economy. McKinsey estimates that small businesses employ more than 60 million workers and account for nearly half of total US employment.
As owners retire, many businesses will either:
- Transfer to new ownership
- Be sold to employees or family members
- Close permanently
Historically, most small business exits have resulted in closure rather than successful ownership transfer. McKinsey estimates that in 2022, 92% of small business exits occurred through closure, while only a small percentage resulted in sales or succession.
This creates both economic risk and opportunity:
- Communities can lose jobs, services, and local economic activity when businesses close
- Buyers and operators can acquire established businesses with existing cash flow and infrastructure
What are common ETA Models?
ETA transactions are commonly structured in several ways:
- Self-funded acquisitions: Buyers use personal capital, SBA loans, bank financing, or seller financing
- Search funds: Investors back an entrepreneur to identify and acquire a business
- Family or employee transitions: Ownership transfers internally to employees or relatives
- Independent sponsor or small private equity acquisitions: Investors acquire and grow multiple businesses
Why does Business Transferability Matter?
Many retiring owners have significant personal wealth tied to their businesses, but not all businesses are prepared for a successful transition. Businesses are generally more transferable when they have:
- Organized financial records
- Stable cash flow
- Reduced owner dependence
- Documented systems and operations
- Diversified customer bases
Transfer-ready businesses are often easier to finance, value, and sell.
ETA and the Future of Small Business Ownership
ETA is increasingly viewed as an alternative path to entrepreneurship, particularly for operators, managers, veterans, and professionals seeking business ownership opportunities.
At the same time, the retirement of millions of business owners is creating urgency around succession planning and ownership continuity. Successful ownership transfers can help preserve jobs, maintain local services, and keep productive businesses operating within their communities.
