2024 Trends in Entrepreneurship Through Acquisition (ETA)

Many economic, political, and social factors can impact the landscape of entrepreneurship through acquisition (ETA), and unexpected events can alter an entrepreneur's goals. However, looking at recent data and analyzing past market behavior has given us a pretty good idea of what opportunities and trends will be frontrunners in the 2024 fiscal year. 

From waves of retirees and changing social goals of younger generations to market uncertainties and investors' eyes focusing more on sustainability and ecological impact, there are several prominent trends to watch. If you're interested in ETA or have experience with a successful ETA, it's worth checking them out.

Silver Tsunami 

The coming retirement surge of a large number of individuals in the Baby Boomer generation (people born between the years 1946 and 1964) is known colloquially as the "silver tsunami" and is one of the most talked-about trends in ETA. As Baby Boomer business owners retire in large numbers and fewer aging Americans participate in the acquisition world, this presents some prime opportunities for entrepreneurs.

Boomer-owned businesses offer stable, debt-free ventures with loyal customer bases and proven business models. Current statistics show these established businesses carry a 78% profitability rate. Further estimates suggest around 10,000 Baby Boomers retire daily, with 19% owning small businesses, translating to about 4 million companies. Approximately 60% of individuals approaching retirement age lack an exit plan. It's expected that 83% of these 4 million businesses will change hands in the next 5-10 years, involving around $10 trillion in assets over two decades. 

Standing at the ready as older generations move out of the arena are several entrepreneurs just beginning their voyage into ETA. These younger entrepreneurs are a mix of Millennials (people born between 1981 and 1996) and older members of Gen Z (people born between 1997 and 2012) who are looking not only to acquire established businesses but also to evolve the general entrepreneurial landscape and redefine the meaning of "success."

Millennials and Gen Z: Escaping the Corporate Ladder and Business as Usual

Entrepreneurship Through Acquisition has grown among Millennials and Gen Z in recent years. There has been a notable shift in the career aspirations of these generations, marked by an increasing allure towards entrepreneurship through acquisition. The primary drivers of ETA's appeal to Millennials and Gen Z is their desire for independence and change. 

These generations are increasingly disillusioned with the traditional corporate, office-based career path. The rigid hierarchy, slow pace of advancement, and often monotonous nature of corporate jobs do not align with their aspirations for a dynamic and impactful career. 

Entrepreneurship through acquisition can offer an enticing alternative, provide a direct route to leadership and decision-making roles, and allow younger entrepreneurs to change some rules of the game without worrying as much about the typical startup stressors. 

Experiences Over Possessions

Another key factor contributing to this shift is the Millennial and Gen Z preference for experiences over possessions. These generations are more interested in the journey and the learning experiences of running a business than in the material wealth or status traditionally associated with corporate success. Acquiring a business allows them to dive headfirst into a new adventure, learn on the fly, and truly make a mark on their venture. This experiential approach aligns well with their values and lifestyle preferences.

Driven by both the pandemic and the desire for experiences, remote work (and resulting digital nomadism) has risen dramatically. Though there has been some decline in the push for remote-only, remote work and its close cousin, hybrid work, are here to stay. Going remote particularly appeals to the newest batch of entrepreneurs coming out of Gen Z. This generation has embraced the virtual sphere, recognizing the need for both independence and connection and leveraging the many platforms and digital tools available to strike a balance. 

Because of this, 2024 can expect a rise in ETA of successful businesses with strong digital marketing and communication foundations but a small physical footprint with a well-functioning remote team. Businesses that already have solid remote or hybrid policies in place, and those that can be easily transitioned into either scenario, will be acquired by a generation that no longer believes success requires being tied to a desk or regularly commuting to an office building.

Dissatisfaction with Business Bureaucracy

Finally, the growing dissatisfaction with existing business bureaucracy and control is pushing more young individuals towards entrepreneurship through acquisition. Millennials and Gen Z are known for their desire to work in agile, innovative, and less hierarchical environments. They are drawn to businesses with a collaborative nature and appreciate the creator economy. They see that red tape, slow decision-making processes, and the requirement to run every decision "up the ladder" stifles creativity and lessens the drive for quick, impactful action. Through acquiring a small, already-established business, entrepreneurs can implement their vision, ideas, and new communication strategies without the constraints of a large corporate structure. 

No matter how motivated new entrepreneurs are to instigate change and unveil new ways of creating business atmospheres and trajectories, they must still be mindful of and work within the parameters of the general market. 

Stringent Capital Markets

The changing dynamics of access to capital, particularly in the context of capital markets becoming increasingly stringent for unproven businesses, represents a significant trend emerging in the ETA space.

In recent years, we've observed a tightening in capital markets, making it challenging for startups and new ventures with unproven business models to secure funding. In 2024, capital markets are expected to continue favoring less risky investments. This is where ETA stands out as a more attractive space for investors. 

Acquiring an established business with a history of steady cash flow, loyal customer bases, and functioning operational frameworks that can be further optimized will attract investors who are attracted to the stability and predictability the ETA opportunities provide. As investors become more risk-averse, partly due to economic uncertainties and market volatilities, the allure of ETA will be amplified. 

To make your ETA proposition even more attractive to investors, home in on businesses that will satisfy another rising trend for 2024: impact investments.  

Impact Investments

 As tighter capital markets reshape the investment landscape, impact investments have shown remarkable resilience. More environmentally conscious consumers favor companies that prioritize sustainability, driving demand for green products and services that reflect the shift towards environmental and social responsibility. 

Investors' personal values and their increasing awareness of the importance of financing technologies and businesses that address those environmental and social challenges will continue to drive both individual and institutional investors to contribute to positive environmental and social change. 

This approach also aligns with the increasing consumer and regulatory push for responsible business practices, particularly in terms of environmental and social governance (ESG), making such investments not just ethically appealing but also financially prudent. There's growing evidence that companies with strong ESG practices are better long-term investments because they are likely to be more resilient, have a better corporate reputation, and be better positioned to deal with future challenges.

The rapid expansion of impact investing, fueled by the escalating urgency of climate change and the corresponding need for innovative solutions, can open the door for entrepreneurs considering the acquisition of a company that can deliver both financial returns and positive social or environmental impacts.

Networking and Training Gets a Makeover and the Spotlight

The Entrepreneurship Through Acquisition (ETA) landscape in 2024 is witnessing a burgeoning ecosystem of support mechanisms, including seminars, conferences, networking events, and specialized business school classes. These events and programs are pivotal in fostering a community that facilitates knowledge exchange, networking, and skill development for those involved in or interested in ETA.

Online seminars and virtual conferences have significantly transformed the landscape of entrepreneurship through acquisition, offering numerous benefits to entrepreneurs. Reduced travel, accommodation, and venue costs make these events more accessible. And, despite being online, these events frequently offer interactive elements like Q&A sessions, chat rooms, and virtual networking lounges. This can facilitate meaningful connections and discussions among entrepreneurs.

Entrepreneurs of all kinds can greatly benefit from webinars that focus on specific skills like financial modeling, deal structuring, and due diligence. One great platform for a multitude of helpful videos is BrightTALK, where you can find constantly updated webinars on business communication conducted by industry experts. And don’t forget about the potential personal and professional growth you can experience by taking online courses for entrepreneurs. 

Overall, the digital makeover in the business networking landscape, particularly in the field of entrepreneurship through acquisition, is empowering entrepreneurs with more resources, connections, and opportunities than ever before. This trend is likely to continue growing as technology advances and the global business environment becomes increasingly interconnected. Listed here are a few virtual conferences already scheduled for 2024:

• 2024 AILA Investors and Entrepreneurs Conference & Webcast: Virtual Webcast
• Investify Symposium 2024
• Global Entrepreneurship Summit 2024 (hybrid conference based in Canada)

If in-person is what you’re looking for, there is no shortage of business and entrepreneurial conferences happening in 2024 across the globe. 

One of the notable events in this sphere is the ETA@MIT Summit hosted by MIT's hub for search funds and micro private equity. This summit promises a day filled with engaging presentations and interactive sessions on various topics, including value creation with AI and ETA to reduce the racial wealth gap. Additionally, the event includes tactical workshops and facilitated networking events, offering attendees comprehensive insights and connections in the field of ETA.

Another significant event is Women in ETA, organized by the Polsky Center for Entrepreneurship and Innovation. This workshop focuses on the role of women in ETA, featuring panel discussions with key stakeholders and providing valuable insights into this niche area.

These events are just a glimpse into the growing ecosystem that supports ETA. Be on the lookout for more conferences that center systemic solutions over quick fixes, as impact investors are engaging with NGOs, governments, startups, and educational initiatives to foster long-term solutions for societal and environmental issues.

Conclusion

The landscape of Entrepreneurship Through Acquisition (ETA) in 2024 reflects a dynamic interplay of generational shifts, evolving investment patterns, and the ongoing digital transformation of the business world. As we look to the future, it's evident that ETA is not just about acquiring businesses but also about reshaping them. 

Entrepreneurs venturing into ETA in 2024 will need to navigate a complex yet promising landscape. The trends outlined here paint a picture of an exciting and transformative period for ETA, offering both challenges and opportunities for those willing to embrace and adapt to these changes.