Successful Entrepreneurship through Acquisition

The single most common contributor to whether ‘entrepreneurship through acquisition’ is successful or not, is setting standards too high and not lowing them fast enough.

Yes, there’s a huge element of chance as well, but according to Harvard Business School Professor Royce Yudkoff, when a prospective entrepreneur starts searching on their very first prospective deal, they set unbelievably high standards.

Nothing in the world could get them to buy the first company they see because they want to learn what’s available in the market. And that’s when they realize they need to bring down their standards into what the normal market is for smaller companies.

They stop requiring prospective companies be perfect. It’s okay that the business has a few flaws like every company; and their quality standard starts to move to market. And, according to Professor Yudkoff, how quickly they move quality standards to market determines how successful they will be as an entrepreneur through acquisition.

Some people never get there. Others can take a year, and some can do it in as little as 60 to 90 days. In Professor Yudkoff’s experience, those who get there quickly stand a much better chance of acquiring a company.

Conversely, you’ll see people who’ve owned a business for 30 years enter the market with price expectations way above market.

As they get feedback from the market, these sellers either gradually bring their expectations down, or they leave the market.

Professor Yudkoff says to look for the collision between those two forces entering the zone at the same time. The speed of learning by the buyer and the seller is most often the difference between success as an entrepreneur through acquisition, or not.