Why wait? Business grads buying firms to install themselves as CEO

An important development from the financial markets: Business grads buying firms to install themselves as CEOImage source, Ania AlievImage caption, Ania Aliev bought a business for her to own and run after she left collegeByChris MarshallBusiness reporterPublished2 hours agoConfined to her hospital bed as she waited for her baby to be induced, Ania Aliev was attempting to finalise a deal to buy a company and put herself in the top job. "I was answering investors and emailing people, and the investors were yelling at me 'you need to focus on having your child right now! '," says Aliev, who was 27-years-old at the time in late 2023.

A recent MBA (Master of Business Administration) graduate from the prestigious Tuck School of Business at Dartmouth College in New Hampshire, she gave birth to a boy. Just three months later she was owner and CEO of Massachusetts-based medical equipment business Life Support Systems. It used to be the case that US business course graduates would leave university and typically either join a corporate giant to try to work their way to the top, or else form their own start-up.

Economic Details

But some, impatient to be the boss of an established firm, are instead now borrowing hundreds of thousands of dollars to buy such a business and install themselves as the boss. Is such entrepreneurial go-getting to be applauded, or is it excessive youthful chutzpah? And how do the employees react when a 20-something with little experience suddenly turns up to order them about?

Image source, Ania AlievImage caption, Ania juggles work with being a mumAliev, who had worked in finance before doing her MBA, was wary of first impressions at the firm. "If you judge a book by its cover, it's very easy to be like 'oh, young girl, Wall Street background, coming in here and telling me what to do'… I was really conscious about that," she says. "And I really didn't want to come off that way to my team.

"Aliev says her approach was initially to just observe and learn. "Not coming in and telling them 'this is how things are going to be'. "The practice of a young entrepreneur borrowing money to buy a company and become its boss is known as entrepreneurship by acquisition or "search-fund investing".

Analyst Views

The would-be business owner sets up a fund, called a search fund, and aims to attract money from both institutional investors and wealthy individuals. At the last count, in 2023, a record 94 search funds, external were found to have been launched that year in the US, with $682m (£505m) said to have been invested in funds and the companies they bought across 2022 and 2023. In turn, there are now investment companies in the US that specialise in backing young entrepreneurs and their search funds, such as Search Fund Partners, Aspect Investors and Anacapa Partners.

They are attracted by reported high rates of return.

Financial markets are tracking the development closely as investors assess the likely impact.