Business grads buy firms to become CEOs

A rising number of young business school graduates in the U.S. are skipping the traditional career climb and instead buying established companies to install themselves as CEO.

The trend, known as entrepreneurship by acquisition or "search-fund investing," allows ambitious professionals to take charge of a business without starting from scratch. In 2023 alone, a record 94 search funds were launched in the U.S., with $682 million invested in such ventures across 2022 and 2023. Investors, including specialized firms like Search Fund Partners, are drawn to the high returns reported by these funds, which a Yale School of Management study described as "juicy by any standard."

Ania Aliev, a 27-year-old MBA graduate from Dartmouth’s Tuck School, exemplifies this approach. While in labor in late 2023, she finalized a deal to purchase Life Support Systems, a Massachusetts-based medical equipment firm. Within months, she was its CEO. Aliev, previously in finance, was mindful of her team’s skepticism. Rather than assert authority immediately, she focused on observing and learning first. Her strategy reflects a broader pattern: young buyers often prioritize humility to win over experienced employees.

For existing owners, selling to a younger entrepreneur offers an exit strategy, often for retirement. The new leaders aim to grow the business over 5-10 years before selling at a profit. While critics question whether inexperienced CEOs can manage established firms, the financial success of search funds suggests the model is gaining traction—and reshaping traditional career paths.