MBA Grads Are Borrowing Big to Buy Companies and Skip the Corporate Ladder

A record 94 search funds launched in the US in 2023, with $682m (£505m) invested across 2022 and 2023 in the funds and the companies they bought, according to the latest count. Behind that number is a growing cohort of business school graduates who skip the corporate ladder and the startup grind entirely: they borrow hundreds of thousands of dollars, buy an established firm, and install themselves as boss.

Ania Aliev closed her deal from a hospital bed. Confined while waiting for her baby to be induced in late 2023, the then-27-year-old was still finalising the acquisition of Massachusetts-based medical equipment business Life Support Systems.

"I was answering investors and emailing people, and the investors were yelling at me 'you need to focus on having your child right now!'," says Aliev, a recent MBA graduate from the Tuck School of Business at Dartmouth College in New Hampshire. She gave birth to a boy. Three months later she was owner and CEO of the company.

The practice is known as entrepreneurship by acquisition, or search-fund investing. The would-be owner sets up a fund and raises money from institutional investors and wealthy individuals, then uses it to buy a company they intend to run. Specialist backers have emerged in the US, including Search Fund Partners, Aspect Investors and Anacapa Partners.

They are drawn by reported high rates of return. A report by Yale School of Management found "juicy returns by any standard" were available, and that funds generally "remained relatively stable". For sellers, often older owners looking to retire, the model offers an exit. For buyers, the plan is typically to grow the business for five to 10 years and then sell at a profit.

Aliev, who had worked in finance before her MBA, was conscious of how she would land with staff. "If you judge a book by its cover, it's very easy to be like 'oh, young girl, Wall Street background, coming in here and telling me what to do'… I was really conscious about that," she says. "And I really didn't want to come off that way to my team."

Her approach was to observe first. "Not coming in and telling them 'this is how things are going to be'." Now more than two years in, and 30 years old, Aliev has led the takeover of a competitor, which she says has doubled the size of the business.

Employees have largely welcomed the growth focus. "It can be a little bit challenging sometimes for those of us who have been here a long time... but it's been really great since she's come in because she's just turned a lot of stuff around, which is really exciting," says Meaghan Richardson, an employee at Life Support Systems.

Not everyone stayed. Some workers left, and Aliev made others redundant, because "they just didn't want to work in a growth company".

When it goes wrong

Scott Duncan, a Harvard Business School MBA, secured investment in 2018 to buy F&M Tool and Die, a Massachusetts maker of industrial parts. The deal looked strong on paper given his engineering background. He was 31 when he took over.

His first day was "terrifying". "All of the employees had been doing this for decades. I was this newcomer and I had really no idea what was going on. So, they were really perplexed by me as well," he says.

Things unravelled quickly. Skilled employees left, including one who started a low-cost competitor and took an important customer with him. Duncan realised he could not fill the previous owner's shoes. "This whole organisation had built up around him, his personality," he says. "I bought a business that was very difficult for anyone except for that guy to run."

Then came Covid, cheaper Chinese competition, and even a flooded workshop. The struggle lasted seven years, ending in February 2025. "I brought everybody into the conference room. I had to grab a chair and sit down in it because I was physically unable to stand. I thought I was going to pass out, but all the employees came in and I said, 'we're shutting the doors'," Duncan says. He describes the ordeal as "death by a thousand cuts".

Duncan, now 39, a husband and father of two daughters, also filed for personal bankruptcy. "I was a shell of a human being," he says. He now works as a consultant.

Despite all this, he does not oppose the model. But he urges caution for "starry-eyed MBAs" who think they are immune from the risk of failure. "It's really, really hard, even when things are going well," he says.

Age isn't the issue

Jacqueline Ackerman, a leadership coach, business psychologist and managing partner of Chicago-based Vantage Leadership Consulting, argues that workers rarely object to a young boss as such.

"I don't think people actually resist youth. I think they resist uncertainty," Ackerman says. "A lot of times people would associate younger leaders with a lot of change."

Back at Life Support Systems, Aliev says working life beats her old career in finance. "I knew I didn't want to do banking… I just was so unfulfilled by it," she says.

With record numbers of search funds launching and specialist investors lining up to back them, the model's next test will be whether more deals look like Aliev's growth story or Duncan's seven-year fight for survival.