Most people who want to run a company assume they have to build one. There is a second path, and in Minnesota right now it is the more available one: buy a business that already works.
That is entrepreneurship through acquisition. You skip the startup, and you take over something with customers, revenue, and a team already in place.
Here is how it works, what to look for, and how these deals get funded.
What is entrepreneurship through acquisition?
Entrepreneurship through acquisition, often shortened to ETA, is the practice of buying an existing profitable business and running it yourself, rather than founding a startup or waiting for a promotion.
The buyer is usually an operator, not an investor. You are not acquiring a company to flip it. You are acquiring a job you own, along with the cash flow that comes with it.
It goes by a few names depending on how the purchase is financed. A search fund, a self-funded search, and an independent sponsor deal are all versions of the same idea.
Why are so many businesses for sale right now?
Because the owners are retiring and most of them have no plan for what happens next.
There are 36.2 million small businesses in the United States as of 2026, according to the SBA Office of Advocacy. More than half are owned by someone over 55, and one in four by someone over 65. McKinsey projects that roughly six million boomer-owned businesses will change hands by 2035.
The gap is the opportunity. Roughly 72% of boomer business owners have no written succession plan. McKinsey's read is blunter still: if current trends hold, as many as 92% of these businesses will close rather than transfer to a new owner.
These are profitable companies with real customers and long histories that will simply shut off because nobody was standing there ready to take the keys. That is the whole case for acquisition entrepreneurship.
Who is a good fit for buying a business?
People with operating experience, a tolerance for ambiguity, and enough network to hear about deals before they are listed.
The skills that matter most are unglamorous: reading financial statements, managing people who were there before you, making decisions without complete information, and staying with a problem past the point it stops being interesting.
It is often pursued mid-career, after someone has run a department or a P&L. But the more honest requirement is not age, it is whether you can lead a team that did not choose you, on day one, when they are nervous about the sale.
What should you look for in a business to buy?
A business with a long operating history, steady margins, a real customer base, and an owner who genuinely wants to sell.
The commonly used screen looks for:
- At least 10 years of operating history
- Roughly $1.5 million to $15 million in annual revenue
- EBITDA margins of 15% or better
- A durable reputation in its market
- Repeat customers rather than one-time buyers
- Some structural advantage in pricing or location
Then the harder questions. Is it actually profitable, or profitable because the owner has not paid themselves properly? Do you have the skills to run this specific business? Does the daily reality of it fit the life you want? And is the owner serious about selling, or testing the market?
Worked examples help more than checklists here. Our guide on how to invest in a laundromat walks a single asset class end to end, from purchase price through operating margins, and shows what this screen looks like applied to one real business type.
How long does it take to buy a business?
Six months to two years, from starting the search to closing.
Most of that is search. Finding candidates, getting owners to talk, and walking away from the ones that do not hold up under scrutiny. The financing and closing work is the shorter phase, though it is the phase where deals most often break.
Plan for the long version. Buyers who budget six months and hit month eighteen tend to accept a worse business rather than admit the timeline was wrong.
How do people pay for the search and the purchase?
There are five common funding structures, and they differ mainly in who controls the deal.
Self-funded search
You cover your own search costs, then finance the purchase with some mix of personal capital, seller financing, and bank debt. This is the most common route and it leaves you with the most ownership and the most control.
Crowd-funded search
Search and acquisition capital raised from a distributed group of smaller investors.
Traditional search fund
A group of investors funds your search in exchange for preferred equity in whatever you buy, plus the right to invest further at acquisition. You give up equity, you gain a bench of experienced people who have done this before.
Sponsored search
You partner with an investment firm that funds the search and most of the purchase. They typically control the board.
Incubated search
Similar to sponsored, but you search alongside other buyers with shared infrastructure and deal flow.
Most acquisitions use several sources at once. A typical structure combines buyer equity, seller financing, and bank debt, because no single source wants to carry the whole risk.
On the bank side, this is where SBA 7(a) and 504 loans do real work. The SBA programs exist in part for exactly this transaction, and they can carry a business purchase that conventional structures alone would not.
How many searches actually end in a purchase?
Roughly 58% of search funds have acquired a company, based on the Stanford Graduate School of Business 2024 Search Fund Study. For funds launched between 2021 and 2024, that figure is closer to 48%.
Worth sitting with that. Something like four in ten searches end without a purchase, and the recent numbers are trending down as more buyers compete for the same businesses.
That is not a reason to skip the search. It is a reason to budget for it honestly, keep your standards where they belong, and treat walking away from a bad business as a successful outcome rather than a failed one.
Why buy a business instead of starting one?
Because you start with revenue, customers, and a team, and because the capital required is often lower than funding a startup to the same level of cash flow.
A startup asks you to prove that anyone wants the thing at all. An acquisition asks a narrower and more answerable question: can you run this better than it is being run now?
There is also the part that does not show up in a model. When a company that has been in a community for thirty years changes hands well, the jobs stay, the customers keep their supplier, and the retiring owner gets to leave on their own terms. We finance a lot of these. That transfer is the part that matters locally, and it is the reason we do this work.
How Security Bank & Trust helps
We have financed business acquisitions for Minnesota buyers for years, and we do not lend in a box.
Depending on the deal, that looks like:
- Acquisition term loans based on the enterprise value of the business you are buying
- SBA 7(a) and 504 loans, including refinancing existing SBA debt
- Equipment loans for what comes with the business or what it needs next
- Lines of credit for the working capital the business runs on
- Treasury management so the cash side works from day one
- Commercial real estate financing when the building comes with the company
Beyond the credit itself, we have sat on the bank side of enough of these transactions to be useful earlier than most buyers expect. Bring us in during the search, not after the letter of intent is signed. We can tell you how a deal is likely to be structured before you have spent months on a business that will not finance cleanly.
When you have a target, the due diligence checklist is where to go next. When you are ready to talk structure, our small business acquisition loans page has the detail, or start with the broader business loan guide.
Come talk to us. Even if you are a year from buying anything.
Frequently asked questions
What does ETA stand for in business?
ETA stands for entrepreneurship through acquisition. It refers to buying an existing profitable business and running it as the owner-operator, rather than founding a startup.
How much money do you need to buy a small business?
Buyers typically contribute equity of roughly 10% to 30% of the purchase price, with the rest financed through bank debt and seller financing. An SBA 7(a) loan can allow a lower down payment than a conventional structure. The exact requirement depends on the business, its cash flow, and the deal structure.
What size business do most acquisition entrepreneurs buy?
Most target businesses with $1.5 million to $15 million in annual revenue, at least 10 years of operating history, and EBITDA margins of 15% or higher. That range is large enough to support a full-time owner's salary and small enough that private equity firms are not competing for it.
Can you use an SBA loan to buy a business?
Yes. The SBA 7(a) program is commonly used to finance small business acquisitions, and the 504 program can finance the real estate and major equipment that come with the purchase. Both are available through Security Bank & Trust.
How long does it take to buy a business?
Six months to two years from the start of the search to closing. The search itself is the longest phase. Financing and closing typically take 60 to 120 days once a business is under letter of intent.
Is it better to buy a business or start one?
Buying gives you existing revenue, customers, and staff from day one, which usually means lower capital requirements and faster cash flow than a startup. Starting a business gives you full control over the concept. Buying suits operators; starting suits inventors.
Sources: U.S. Small Business Administration Office of Advocacy, Frequently Asked Questions About Small Business 2026. Stanford Graduate School of Business, 2024 Search Fund Study. McKinsey Institute for Economic Mobility, 2026.
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