MBA Grads Pursue Search Funds as Quick Path to CEO Roles

Last Updated on March 28, 2024 by Robert C. Hoopes

The Rise of Search Funds: A New Path for MBA Graduates

The traditional path of starting a new business may be losing its appeal among new MBA graduates, as the practice of acquiring existing companies through search funds is gaining popularity. While new small business starts are booming, the startup field itself is not growing. In 2022, investors poured over $242 billion into startups, but that number decreased to $170 billion in the following year.

Search funds, which are pools of money raised from investors for entrepreneurs to acquire and run companies as CEOs, are becoming an attractive option for MBA grads looking to enter the business world. Many of these search fund entrepreneurs have limited experience in running a business but are drawn to the opportunity to identify profitable companies with recurring revenue as acquisition targets.

Critics argue that search funds are a shortcut to the CEO position without the traditional journey of entrepreneurship. However, searchers aim to help retiring baby boomer business owners exit with a good sum of money, focusing on leadership and organic growth rather than inventing a new product or having a passion for a specific industry.

The practice of starting a search fund allows MBA graduates to bypass the challenges of starting a new company from scratch and instead focus on acquiring and growing existing businesses. With this trend on the rise, it is clear that the traditional route of entrepreneurship may be evolving in the business world.