How to Buy a Business Without Millions in the Bank

Just a few months after earning his MBA from the University of Virginia’s Darden School of Business, Ryan Smith became the owner of Garage Door Services, a company based in South Carolina. A U.S. Marine Corps veteran, Smith never imagined he’d run his own business before turning 30.

“While purchasing or starting my own business was always a long-term goal, I didn’t think it would be possible for me so soon after graduation,” said Smith (MBA ’24). “I felt I needed to build up my personal finances first, but there were so many ways to access outside capital and investors who could support me on this journey.”

Smith is part of a growing wave of MBA graduates embracing Entrepreneurship Through Acquisition (ETA) — a career path that offers the opportunity to lead a company without starting one from scratch. Rather than launching a new venture, aspiring entrepreneurs are acquiring established small businesses and focusing on operational improvements and long-term growth.

But while ETA opens the door to business ownership, the path to acquiring a company hinges on one crucial factor: how to finance the deal. From self-funded approaches to traditional search funds, aspiring acquirers must navigate a variety of funding models — each with its own implications for risk, control and support.

Sizing Up the Right Target

According to Les Alexander, the John Glynn Endowed Professor and a professor of practice at the UVA Darden, ideal ETA targets are profitable businesses that have been around for many years, often with EBITDA (earnings before interest, taxes, depreciation, and amortization) between $500,000 and $5 million.

The beauty of ETA lies in its accessibility — even recent graduates with limited personal capital can buy and lead companies.

As Smith learned at Darden, there are various funding models within ETA, including Traditional Search Fund, Self-Funded Search, Accelerator, and Sponsored Search. Understanding them is essential for aspiring searchers.

Traditional Search Fund Model

The traditional search fund involves raising capital from a group of investors to support the search phase — typically a two-year period in which the searcher looks for a business to acquire. Those investors have the first right to participate in financing the target acquisition, but they can also refuse; in such cases, the searcher may seek the necessary capital from other investors.

One key advantage of this model is that the searcher receives a salary during the search. Additionally, traditional search fund investors are often experienced in mergers and acquisitions (M&A) and provide mentorship, strategic guidance, and even board-level support post-acquisition, according to Alexander.

However, the trade-off is significant: The investors who fund the acquisition collectively hold a majority ownership stake, while the searcher typically retains only up to 25% of the equity in the acquired company.

A word of caution: the investors tend to have the final say on whether a deal moves forward. “If a searcher loves one company and wants to buy it, but the investors don't want to fund it, you typically can't get the deal done,” said Alexander. “So, make sure that your investors are aligned with what you want to do.”

Self-Funded Search Model

For those who value independence and larger ownership stakes, the self-funded model is an appealing alternative. The entrepreneur forgoes outside capital during the search phase, using personal savings or part-time income to finance the effort. Once a target company is identified, said Alexander, self-funded searchers typically use a combination of Small Business Administration (SBA) loans, seller financing, and a personal equity investment or some external equity capital to fund the acquisition.

A common capital stack might look like this:

- 80% via an SBA loan

- 10% via seller note

- 10% from personal capital or equity investors

Because self-funded searchers don’t take investor money upfront to search, they retain more autonomy and control. Post-acquisition, they can own a much larger portion — often a majority or even 100% — of the business since a large portion of the purchase price is funded with debt.

The downside is personal financial risk. “If you go the SBA debt route,” said Alexander, “anybody who has 20% or greater ownership in the company is required to provide a personal guarantee. So, you are putting your personal assets at risk if the company doesn't perform and the debt is called.”

Alexander says that the self-funded model is often more suitable for experienced professionals who have built some savings and have relevant M&A or industry expertise.

Accelerator Model

In this model, the searcher joins a cohort supported by an accelerator program that provides salary, office space, mentorship, and educational resources over a two-year period. “They also provide the equity capital needed to fund the acquisition,” said Alexander, “and reserve the right to reject deals they don’t find attractive.”

The community aspect of accelerator programs can be appealing for first-time searchers without M&A or private equity backgrounds. Searchers benefit from shared infrastructure, legal and due diligence resources, and peers within their cohort.

However, equity ownership in this model is limited, noted Alexander. Searchers may earn up to 25% of the business over time, often tied to performance milestones and time-based vesting schedules.

Accelerators are growing in number and influence, helping searchers de-risk their entry into ETA while providing guided support in a structured environment to learn and grow pre- and post-acquisition.

Sponsored Search Model

In a sponsored search, the entrepreneur partners directly with a single financial sponsor, such as a family office or a private equity firm. The sponsor provides capital for both the search and the acquisition and is typically the controlling shareholder after the transaction, said Alexander.

This model offers a tailored approach with significant mentorship, strategic support, and access to deep networks. Sponsors will want to have strong alignment with the searcher on industry segments, geography, or company profiles, which can help focus the search process.

The trade-off is autonomy. The sponsor plays a large role in the investment decision. Equity participation varies by deal and relationship but is generally less than in the self-funded model and may require vesting.

The sponsored model is ideal for entrepreneurs who prefer not to go it alone but also don’t want the broader investor base of a traditional fund.

This is precisely what Smith found appealing about the sole sponsor model. After connecting with Darden alums Adam Duggins (MBA ’08) and Rick Ramsey (BS ’01, MBA ’07) , co-founders of New Page Capital, Smith realized, “What I wanted to do was aligned with what they were already doing.”

New Page, based in Greensboro, North Carolina, focuses on acquiring and growing private companies within central North Carolina

Smith is originally from Spartanburg, South Carolina and wanted to replicate the success of New Page in a similar geography.  

“My hometown is one of the fastest-growing areas in the Southeast. By focusing my search around businesses in the Upstate, I believed I could capitalize on existing relationships and improve the odds of finding a great business,” he said. “New Page had already shown success in this model and was willing to support me while traditional investors typically require a broader search.”

In addition, Smith preferred to work with a single investor base rather than a consortium of investors, as this streamlined the decision-making process and allowed for quicker action. “I began actively searching for businesses  in the months before my graduation from Darden,” he said. “When we decided to pursue Garage Door Services, I was able to simply pick up the phone and call the people I trusted. That trust allowed us to move much more quickly and efficiently than other potential buyers.”

Choosing the Right Path

There is no one-size-fits-all model in ETA. The right path depends on a searcher’s financial position, experience, risk tolerance and personal goals.

Alexander advises aspiring searchers to consider attending ETA conferences that bring together search fund entrepreneurs, investors, and other participants in the ETA ecosystem.

On 5-6 September 2025, Darden will host the annual Southeast Entrepreneurship Through Acquisition Conference in partnership with Georgetown University McDonough School of Business, University of North Carolina Kenan-Flagler Business School, and Duke University Fuqua School of Business.

Smith credits the Southeast ETA Conference, which he attended in his first year at Darden, with opening his eyes to career paths he hadn’t previously considered. “I became immediately interested in buying and growing a business,” he said, “and I knew that at some point in my life I’d take that path.”

Discovering the right funding model brought that vision to life sooner than he ever expected.