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

**Business Graduates Forgo Traditional Paths, Purchase Companies to Become CEOs**

Ania Aliev exemplifies a growing trend among business school graduates: acquiring existing companies to immediately assume leadership roles. While awaiting the induction of her baby in late 2023, Aliev, then 27, was in the midst of finalizing a company acquisition. "I was answering investors and emailing people, and the investors were yelling at me 'you need to focus on having your child right now!'," she recounted.

Aliev, a recent MBA graduate from Dartmouth College's Tuck School of Business, gave birth to a son. Just three months later, she became the owner and CEO of Life Support Systems, a medical equipment business based in Massachusetts.

Historically, U.S. business graduates typically pursued careers within large corporations, aiming to climb the ranks, or launched their own startups. However, a new wave of entrepreneurs, eager to lead established firms, are now securing substantial loans—often hundreds of thousands of dollars—to purchase businesses and install themselves as chief executives.

This shift raises questions about whether such ambition is commendable or merely youthful overconfidence. Furthermore, how do long-term employees react to a new boss in their twenties with limited prior experience?

Aliev, who had a background in finance before her MBA, was acutely aware of the potential for negative first impressions. "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 stated, emphasizing her desire not to project that image to her team. Her initial strategy was to observe and learn, rather than immediately dictating changes.

This practice of young entrepreneurs borrowing capital to acquire and lead companies is known as entrepreneurship by acquisition, or "search-fund investing." It involves the aspiring business owner establishing a "search fund" to attract investments from both institutional investors and affluent individuals.

In 2023, a record 94 search funds were launched in the U.S., with $682 million (£505 million) invested in funds and their acquired companies across 2022 and 2023. Specialized investment firms, such as Search Fund Partners, Aspect Investors, and Anacapa Partners, have emerged to support these young entrepreneurs and their search funds.

These investors are drawn by the prospect of high returns. Despite potential skepticism about placing a twenty-something in charge of an established business, a Yale School of Management report indicated "juicy returns by any standard" are achievable, and funds generally "remained relatively stable." For current business owners, selling to a younger entrepreneur offers an exit strategy, potentially for retirement. For the new leaders, the goal is to grow the business over five to ten years before selling it for a profit.

Now 30 and more than two years into her tenure at Life Support Systems, Aliev has overseen the acquisition of a competitor, which she says has doubled the company's size. She notes that most employees have embraced this focus on growth. Employee Meaghan Richardson commented, "It can be a little bit challenging sometimes for those of us who have been here a long time... but it's been really great since she's come in because she's just turned a lot of stuff around, which is really exciting." However, not all employees have welcomed the new approach; some have departed, and Aliev has made others redundant because "they just didn't want to work in a growth company."

Entrepreneurship by acquisition is not without its risks, and can lead to failure. Scott Duncan, a Harvard Business School MBA graduate, sought to acquire and manage an established business in 2018. He secured investment to purchase F&M Tool and Die, a Massachusetts-based industrial parts manufacturer. The acquisition appeared promising on paper, aligning with his engineering background.

At 31 when he took over, Duncan described his first day as "terrifying." He recalled, "All of the employees had been doing this for decades. I was this newcomer and I had really no idea what was going on. So, they were really perplexed by me as well." What followed was a seven-year struggle to keep the business solvent.

Skilled employees left, including one who started a low-cost competitor and took a key customer. Others resisted change, and Duncan realized he couldn't replicate the previous owner's leadership style. "This whole organisation had built up around him, his personality," he explained. "I bought a business that was very difficult for anyone except for that guy to run." This challenging start was compounded by the Covid pandemic, increased competition from cheaper Chinese manufacturers, and even a flooded workshop, leading to a battle for survival that lasted until 2025. Duncan characterized it as "death by a thousand cuts."

In February of last year, Duncan was forced to close the business. "I brought everybody into the conference room. I had to grab a chair and sit down in it because I was physically unable to stand. I thought I was going to pass out, but all the employees came in and I said, 'we're shutting the doors'." Now 39, a husband and father of two daughters, Duncan also had to file for personal bankruptcy, describing himself as "a shell of a human being."

Despite his ordeal, Duncan, who now works as a consultant, does not oppose the concept of young entrepreneurs raising capital to acquire businesses from older owners. However, he cautions "starry-eyed MBAs" against underestimating the risks of failure. "It's really, really hard, even when things are going well," he advises.

Jacqueline Ackerman, a leadership coach and business psychologist and managing partner of Chicago-based Vantage Leadership Consulting, suggests that workforces generally do not object to a young leader based solely on age. "I don't think people actually resist youth. I think they resist uncertainty," Ackerman stated. "A lot of times people would associate younger leaders with a lot of change."

Back at Life Support Systems, Aliev expresses greater fulfillment in her current role compared to her previous career in finance. "I knew I didn't want to do banking… I just was so unfulfilled by it."