Entrepreneurship Through Acquisition at Daniels

This workshop will teach you about the new meaning of ‘ETA’

If you followed Entrepreneurship@DU’s director, Joshua Ross, for a day, you’d likely hear him mention “ETA” a few times. Without context, you might think he was referencing the estimated arrival time for his next meeting. But you’d be wrong.

Entrepreneurship through acquisition is the new ETA getting attention in the University of Denver’s Entrepreneurship@DU. It’s a form of entrepreneurship that helps aspiring business owners fast-track their path to success by purchasing an existing business. Instead of pursuing a novel business idea from scratch, they can acquire a proven base of products, customers and cash flow—then innovate and grow it.

Joshua Ross

Ross explains that ETA is a good business strategy for those who want to mitigate the risks of starting a new business—like having to think of a viable idea, invent a new product, raise capital, build a brand and gain a customer base. While the failure rate for startups is as high as 90% within seven to 10 years, with entrepreneurship through acquisition, around 70% of businesses are still operating within that same time frame.

ETA differs from the more well-known mergers and acquisitions (M&As), private equity and venture capital transactions. It isn’t about buying a company and running it the way it’s always been done or putting up the funds but hiring someone else to run the daily operations. And it’s not synonymous with the M&A model where enormous companies buy other very large companies and create efficiencies by eliminating redundant processes and positions.

“It’s buying a business that has potential and injecting the entrepreneurial spirit into it, and likely some capital, the right team, maybe some technology or new processes,” says E@DU teaching assistant professor Neil Pollard. “Entrepreneurship is the first word in ETA because there’s a renewed focus on acquisition opportunities to get into your own company. It’s the growth opportunity and the innovation that exists in old, legacy businesses that is the exciting part of ETA.”

Speaking of legacy businesses, Ross and Pollard predict an abundance of opportunity on the horizon with more than $10 trillion of wealth tied up in small businesses owned by baby boomers. With some 11,000 boomers turning 65 every day, those businesses will either be shut down or sold for continued ownership and operation. Most won’t change hands within families. But if they do, family businesses go through a huge attrition rate when they pass from parent to child. Only about 30% survive a second generation, and 12% survive a third, according to Daniels’ Bailey Program for Family Enterprise. Pollard explains that many children of retiring business owners either want to forge their own professional path or don’t have the same skill set as their entrepreneur parent(s).

All to say, the Entrepreneurship@DU leaders aren’t ignoring this huge shift in the economy. While they’ve spent the last four years building the entrepreneurship community at the University, Ross says ETA is a perfect way to bring value to the external community as well.

An adjunct faculty member and Daniels alum first brought the idea to Ross, then Pollard spent last summer researching it. He found only six substantial academic papers on the topic of entrepreneurship through acquisition—compared to thousands on venture capital, private equity and startup entrepreneurship. He found ETA curriculum at a few large business schools like Harvard, Wharton and the University of Chicago, but hardly any resources in Colorado for entrepreneurial buyers or sellers.

And while numerous self-paced courses are available online that purport to teach ‘get rich quick’ strategies for buying companies, Pollard cautions, “A lot of them slant toward buying a company, installing somebody to run it, then laying on a beach and watching the money show up without having to work.”

Neil Pollard

“I think there’s some misinformation and delusions of grandeur,” he says. “It’s incumbent on somebody—and it’s going to be us—to peel back those layers and be like, ‘Here’s what it really looks like. This is not easy. This is hard work. This is buying and running a company. But also, there are some really cool aspects of it.’”

Entrepreneurship@DU’s ETA offerings will cover those topics that are lacking in community education, such as franchising as a form of ETA (bringing in expertise from the Daniels’ Liniger Center on Franchising), driving profitability by growing businesses through economy of scale, how to buy businesses, and the strategic steps necessary to sell a business for maximum value.

“It’s inherently entrepreneurial to see a gap and try and fill it with something interesting,” Pollard says.

Entrepreneurship@DU will offer its first one-topic, one-credit ETA “sprint” to undergrad and graduate students later this month, and members of the community can learn more about ETA at a free event, Entrepreneurship Through Acquisition (ETA): Skip the Startup, Buy a Business, from 8:30 a.m.-12:30 p.m. on Friday, Feb. 28, at the University of Denver Commons. Subject matter experts—including entrepreneur and Executive MBA adjunct instructor Sean Kearns—will share real-life success stories and important considerations when buying a business.

“When someone pursues ETA, they must understand how to find a company, how to finance it and how to grow it. These three activities require very different skill sets,” Kearns offers, adding that his presentation will touch on each of these components and draw from his experiences successfully acquiring and selling two companies.

Entrepreneurship@DU encourages anyone who wants to learn more about ETA to attend and share feedback about topics of interest for future seminars. You can register for the event here.

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