Harvard Podcast Spotlights The Growing World Of Acquisition Entrepreneurship

Co-hosts Royce Yudkoff, at left, and Richard Ruback share a laugh during a recording of Think Big, Buy Small, their popular Harvard Business School podcast about entrepreneurship through acquisition.

In 2001, Logan Leslie graduated high school, enlisted in the Army after 9/11, and spent seven years in Special Forces before enrolling at Harvard College. By the time he arrived at Harvard Business School, he was a husband, father, and seasoned professional with a different perspective from many of his peers. 

After completing the JD/MBA program, he didn’t join a big firm or found a startup. He started buying auto repair shops.

“Imagine buying one of these, and you’re totally dependent on this owner-operator, who probably is selling because they want to retire. And now what do you do?” says Royce Yudkoff, MBA Class of 1975 Professor of Management Practice of Entrepreneurial Management at Harvard Business School.

While not the flashiest path to entrepreneurship, Leslie’s strategy represents a road to ownership favored by a growing number of MBAs – even Harvard Business School MBAs: entrepreneurship through acquisition (ETA). Leslie centralized back-office work, standardized information systems, and leveraged purchasing power. In three years, he bought 87 shops.

His ETA story is one of many featured in Harvard Business School’s popular podcast Think Big, Buy Small, co-hosted by Yudkoff and his longtime teaching partner, Richard Ruback.

When the two started teaching ETA at Harvard 15 years ago, ETA was a specialized topic taught mainly at elite schools like Stanford and Harvard. Now any business school worth its salt has to offer ETA in some form or another. Business Insider recently called it the “hot new MBA hustle.”

“It’s the opportunity to be an entrepreneur on your own business through buying somebody else’s,” says Ruback, a Baker Foundation Professor and the Willard Prescott Smith Professor of Corporate Finance. 

“And the goal, of course, is to grow it, improve it, make it better, and make it part of your life.”

Yudkoff, HBS Class of 1980, co-founded ABRY Partners, a Boston private equity firm that has completed more than $27 billion in transactions. Ruback built his career as a corporate finance scholar, earning his Ph.D. at the University of Rochester, teaching at MIT Sloan, and joining the HBS faculty in 1987.

Royce Yudkoff

Some 15 years ago, the two reconnected with an idea to collaborate on a new course that merged Yudkoff’s experience sourcing and acquiring mid-sized companies and Ruback’s deep financial knowledge. Initially, they focused on the financial management of small firms – how to operate and structure them differently from large corporations. As their research progressed, they became increasingly interested in entrepreneurship through acquisition and bringing it into the classroom. 

Today, the pair teach two ETA courses: a fall case-based course called The Financial Management of Smaller Firms and a spring field called Entrepreneurship through Acquisition. The courses have been fully enrolled for the last 12 years, and dozens of their MBA students pursue ETA either immediately after graduation or later in their careers.

In 2023, the partners launched their podcast to reach beyond the classroom. It is named after their popular book, HBR Guide to Buying a Small Business: Think Big, Buy Small, Own Your Own Company, published in 2017.

“One of our big goals is to expand the influence of our research and bring it to the widest possible audience as we can,” Ruback says. “Our classroom reaches a couple hundred students a year. Our book has sold about 80,000 copies, which is a lot of years of teaching at 200 students a year. We were really impressed at the fact that we could quickly influence so many people so quickly. And the podcast was just an extension of that idea.”

The show has earned a 4.9-star rating on Apple Podcasts. Its 33 episodes mix academic rigor with practical stories, drawing from the duo’s 15 years of research and teaching. 

“One of the things that Rick and I are leaning into, not exclusively, but for a significant part of the podcast, is people who don’t have an MBA or a business school training,” Yudkoff says. 

“But they have taken the path of working in someone else’s company, and they’re bringing this sort of experience and scrappiness to bear in their searches. We really want to speak to that very large audience.”

ETA offers an MBA career path different from the more traditional investment banking, consulting, or founding a brand new venture.

“Most people, when you say the word entrepreneurship, they think startup. They think of rubbing two sticks together to make fire,” says Yudkoff. “This is entrepreneurship by buying an existing, enduringly profitable small company, usually from the retiring founder.”

Richard Ruback

Small businesses account for 99% of U.S. businesses and employ nearly half of private sector employees. They generate 43.5% of American GDP, according to the U.S. Chamber of Commerce. And they provide goods and services communities can’t do without: Pest control and plumbing, hotels and physician managed health clinics, childcare and funeral homes. And of course, auto repair shops. 

As baby boomers look to retire in the next five to 10 years, there are a lot of small businesses that will have to change hands or close down for good. Many have no succession plans.

While buying an existing business might reduce startup risk, ETA is no walk in the park. Business owners are extraordinarily secretive. They don’t have to share their finances like public corporations do. Searchers – those looking to buy – spend about two years on average finding and closing a deal. 

In a traditional search fund, MBAs raise money from a group of investors to support them while they look for small to mid-sized companies with strong returns, often through cold calls to owners. Investors receive equity or a share of the eventual sale. A sponsored search involves fewer investors or a private equity firm, which provides capital and mentorship. In a self-funded search, entrepreneurs use personal savings or SBA loans with favorable terms. This option gives them more control and ownership but also more risk.

In class and on their podcast, Yudkoff and Ruback stress how “how psychologically and physically taxing searching is,” Yudkoff says. 

The frustration hardly ends at closing. 

“That first year is really hard,” Ruback says. “Lots of work, lots and lots of work, 14-hour days that seem endless. Some things do go well, but you forget the things that go well really quickly and focus on the things that don’t go well, because you’re a human and want to succeed.”

Ruback and Yudkoff even have a phrase for it which they present in their class and talk about on the pod: “the angst chart.” Early anxiety peaks during the search and first year of ownership before eventually leveling into the long-term lifestyle many searchers seek.

The cohosts inform listeners through two types of episode: Journey stories – like Leslie’s auto repair roll-up – follow individuals as they navigate ETA. Expert/provider episodes feature some of the behind-the-scenes folks required for ETA deals. Think attorneys, bankers, and academics discussing specific topics like revenue quality, financing, and legal considerations. 

Season 3, which launched in September, features guests like Will Smith, host of the Acquiring Minds podcast, and Paige Sopcic, President of CanSource and a former GE engineer who pursued ETA after her Harvard MBA.

In the latest episode, “

Climbing The Revenue Ladder,” Ruback and Yudkoff  talk with A.J. Wasserstein, Senior Lecturer at Yale School of Management, about revenue quality – one of the most important but misunderstood parts of buying a small business. They break down different types of revenue, from one-time transactions to recurring contracts, and explain how these differences affect growth, customer retention, acquisition strategy, and valuation. 

Think Big, Buy Small receives thousands of downloads per episode and is among the top 5% of podcasts published in terms of listens and downloads. The show targets a broad international audience that includes business students, young professionals, entrepreneurs, founders, and executives.

“Our goal is to make this 100% accessible, so that anybody can listen to it,” Ruback says. 

These days, both professors are occasionally recognized not by face, but by voice. While coaching kids’ ski racing, a fellow ski coach approached Ruback about buying a business after realizing he’d heard him on the podcast. A family friend’s husband, a commercial pilot, said he and his colleagues were regular listeners. 

Yudkoff has had similar encounters, from professional investors to everyday people. Recently, a pool maintenance worker and his barber both brought up specific episodes. Such moments show how far the podcast’s message travels beyond Harvard and the ETA community, they say.

Beyond that is the impact acquisition entrepreneurs have on not just their own lives, but on the communities around the businesses they acquire.Students the professors taught 15, 10, 5 years ago often come back to thank them for the lessons that changed their lives. 

“One of the surprises to them is the enormous source of satisfaction in how they have helped their employees live better lives,” Yudkoff says. “Over a period of years, they’ve taken young people and taught them skills, and those people have been able to afford a house and nice things for their family. They view that as a deeply moving experience that is consistently underestimated by people contemplating entrepreneurship.”

Ruback agrees. “Our students are just as smart as you can imagine. They’re extraordinarily hard working, and they really, really, love the idea of buying a business, transforming it, and building their own wealth. But also building the wealth of their employees, and making their communities a better place by providing employment and support.”

Think Big, Buy Small is available on Apple Podcasts, Spotify, and wherever you listen. Season 3 is out now.

DON’T MISS: ENTREPRENEURSHIP THROUGH ACQUISITION EXPLODING AT WASHU OLIN & OTHER B-SCHOOLS and CASE CLOSED? WHY MBAS MAY BE LEARNING MORE FROM PODCASTS THAN TEXTBOOKS

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