Strategy/Business Model

Fit is Narrower Than He Once Thought Part of preparing to transition your ownership is viewing your business through the eyes of potential buyers. Last week, I came across a post from Alexander Nadtochiy, President & Co-Owner of General Assembly and Manufacturing in Illinois, USA. With his permission, I wanted to share what he wrote because I believe you will find it both interesting and educational for both existing and aspiring business owners. Since I imagine most of you may not be familiar with Entrepreneurship Through Acquisition, I’ll begin by sharing a brief definition. Entrepreneurship Through Acquisition (ETA) is a path where someone becomes an entrepreneur by buying an existing business rather than starting one from scratch. A common version is the “search fund” model, where an entrepreneur (often called a searcher) spends time looking for a business to acquire, then operates and grows it after the purchase. Now here is the post as it was written: Three years ago, I bought a contract manufacturer in Northern Illinois with about 50 people and 40,000 square feet. After 20-plus years of operating experience, I became President and co-owner of my first entrepreneurial venture. It was a welcome change after 15 years in logistics and transportation and 5 in manufacturing, where I was running P&Ls and leading teams of 500-plus across multiple locations. Searchers ask me all the time whether buying a small business is worth it. Here’s the real answer: it depends almost entirely on whether you are the right fit, and on whether you buy the right business. That second half matters more than people think. The worst-case scenario in ETA isn’t failing to buy a business. It’s buying the wrong one, and the gap in damage between those two outcomes is not close. Three years into co-owning my firm, I still believe ETA can be one of the most rewarding paths available. But my view of who’s actually suited for it has narrowed a lot since I first learned about it during my MBA at Northwestern Kellogg. Back then, I thought anyone who was motivated, smart, and entrepreneurial could make this work. I don’t think that anymore. The Operator-Versus-Dealmaker Catch-22 This tension gets discussed, but it deserves more emphasis than it usually gets. To create value after closing a deal, you have to be a good operator. But to close in the first place, you need deal experience, credibility, financing, and the ability to navigate sellers, brokers, and lenders. Those are two entirely different muscles, and most people are not strong in both. A strong operator often needs help getting a deal across the line. Strong dealmakers can wire the money and then discover how hard it is to actually run the thing, which is arguably the more dangerous failure because now they own it. Long term, operating ability matters more, but that’s irrelevant if you can’t buy a business to begin with. Be Honest About Your Candidacy I see posts on SearchFunder from people frustrated that brokers won’t take them seriously. I get it, but often the broker is just making a practical call about whether you’ll close. If you haven’t run a P&L, operated in a similar environment, or built credible investor relationships, be realistic about how sellers, brokers, and lenders will read your candidacy. SBA financing exists, and there are creative ways to get deals done, but ambition alone doesn’t close anything. If the operating background, deal credibility, and capital aren’t there yet, the market tells you fast. That’s not cruelty; it’s information. The community here is supportive, which is one of its best qualities. But encouragement without realism can hurt people in the long term. Sometimes a broker isn’t dismissing you because the system is “broken”; he’s looking at your background and concluding you’re unlikely to close. That doesn’t mean never. It likely means that you need to build more experience, find the right business partner, lock down committed capital, or narrow your search to a space in which you truly have an edge. Make Sure You Want the Actual Job Some people are drawn to ETA because they want to be President or CEO: the title, the autonomy, the LinkedIn update, and the ability to say they bought a company. I understand it; ownership is a real milestone. But the novelty wears off fast. Pretty soon you’re not “the CEO” in the abstract. You’re the person handling a quality escape, a late shipment, a difficult employee, a supplier who let you down, a bank covenant, an angry customer, or a facility problem that nobody else can solve. If what you actually want is the title and prestige, this path will disappoint you quickly. You have to want the job that comes with running the business: the responsibility, the ambiguity, the unglamorous work, and the pressure of being the last stop. If you’re doing it for the announcement, the business will expose that in a hurry. The Reality Check I run a 40,000-square-foot assembly operation. It’s a solid, presentable plant, but it’s no gleaming corporate headquarters. It’s full of real people, real equipment, real problems, and real crises. When consultants, executives, or MBA grads visit, especially ones used to polished offices, I can sometimes watch the question form in their heads: Is this what I’d be doing every day for the next five to ten years? For a lot of them, the honest answer is no. That’s not a knock on them; it’s just a matter of fit. ETA in manufacturing, as well as a lot of service businesses, isn’t for people who need convincing that they will enjoy walking the floor, working with blue-collar teams, and living inside the business. If you have to be sold on that life, it’s probably not your path. I graduated in a Kellogg cohort of 77 students. When I first learned about ETA, I figured each cohort might have two to five people genuinely suited for it. I’m more sober now: I’d say one or two. Not