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97 Ind. L.J. Supp. 1 (2021)

handle is hein.journals/spplmntinlj97 and id is 1 raw text is: Acquisition Entrepreneurship: One Solution to the Looming
Business Succession Crisis
DAVID NOws*
ABSTRACT
In the coming years, there will be a growing supply of small businesses held by
aging owners that need to execute a succession plan, transitioning the business to a
new owner that can carry the business forward in future years. Unfortunately, very
few of these Baby Boomer-led businesses have a plan for who will take over for the
primary business owner when the time comes, creating an emerging leadership crisis.
However, there is an underutilized acquisition strategy that allows for a motivated
and skilled entrepreneur to team with a small group of investors to search for (and
ultimately to purchase) an existing small business. This paper highlights these
transactions, often referred to as acquisition entrepreneurship through search funds,
as a viable way to connect retirement-age business owners with an entrepreneur
ready and willing to take over the business. Additionally, this paper endorses two
strategies for educating entrepreneurs and investor groups on acquisition
entrepreneurship, with the goal of making these complex transactions more
accessible and more common.
INTRODUCTION
As the Baby Boomer generation ages, there is a growing supply of small
businesses that are actively seeking to find new ownership. In fact, experts believe
that $30 to $40 trillion of assets will change hands as the Baby Boomer generation
leaves behind its wealth to its heirs.2 Included in these assets are the 2.34 million
small businesses owned by Baby Boomers.3 Given that very few of these small
businesses have a plan4 for who will take the reins when the primary business owner
* Assistant Professor of Entrepreneurship, Central Michigan University. J.D. University
of Pennsylvania Carey Law School, B.A. University of Michigan. David researches and writes
about legal strategies that impact entrepreneurial ventures.
1. Baby Boomers are commonly defined as having been born between 1946 and 1964.
By 2030, All Baby Boomers Will Be Age 65 or Older, U.S. CENSUS BUREAU (Dec. 10, 2019),
https://www.census.gov/library/stories/2019/12/by-2030-all-baby-boomers-will-be-age-65-
or-older.html.
2. Andrew Osterland, What the Coming $68 Trillion Great Wealth Transfer Means for
Financial    Advisors,     CNBC      (Oct.     21,     2019,    9:01     AM),
https://www.cnbc.com/2019/10/21/what-the-68-trillion-great-wealth-transfer-means-for-
advisors.html (With an estimated $30 trillion to $40 trillion in assets, [Baby Boomers] are
the lifeblood of the financial advice industry and, over the next two decades, they are expected
to pass much of their wealth on to their Gen X and millennial children.).
3. Andrew J. Sherman, As Baby Boomers Retire, Main Street Could Face a Tsunami of
Change, CNBC (Dec. 10, 2019, 7:02 PM), https://www.cnbc.com/2019/12/10/as-baby-
boomers-retire-main-street-could-face-a-tsunami-of-change. html.
4. Id.

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