What is Entrepreneurship through Acquisition?

In the entrepreneurial landscape, there’s often a spotlight on the journey of starting something new—founding a company from the ground up and bringing a fresh idea to life. While this path is undeniably exciting, it’s not the only way to make a significant impact. There’s an entrepreneurial approach that’s often overlooked but incredibly powerful: Entrepreneurship Through Acquisition (ETA). As the Founder and CEO of Venture for Canada, I believe that ETA has the potential to drive economic prosperity in Canada, especially among underrepresented groups.

What Does ETA Mean?

Entrepreneurship Through Acquisition, or ETA, is a strategy where individuals or groups acquire and manage existing companies instead of starting new ventures from scratch. Imagine stepping into a business with an established customer base, proven revenue streams, and operational systems already in place. The appeal here is obvious: reduced uncertainty, lower risk, and a quicker path to generating impact. ETA offers a viable and attractive alternative for many aspiring entrepreneurs, especially those who may not have the resources or desire to start from scratch. 

ETA can encompass a wide range of small businesses across various industries. This strategy isn’t limited to one specific type of company; it opens the door to the acquisition of all kinds of small businesses, from local service providers like plumbing or HVAC companies to niche manufacturing firms, e-commerce businesses, or even healthcare practices. The beauty of ETA is that it allows aspiring entrepreneurs to pursue their passions or interests by acquiring businesses that align with their expertise or long-term goals, whether in retail, technology, food services, or beyond.

For example, someone with a background in finance might purchase an accounting firm, while another individual passionate about sustainability could acquire a small business specializing in eco-friendly products. The flexibility of ETA means that whether you’re interested in acquiring a boutique coffee shop, a digital marketing agency, or a specialized B2B service, there are opportunities to fit various preferences and skill sets. This broad scope makes ETA an adaptable path for entrepreneurs looking to manage a business in virtually any sector, making it a strategy with broad appeal and high customization.

Why Is ETA an Attractive Entrepreneurial Pathway?

ETA isn’t just about keeping businesses open and revitalizing them. When you acquire a business, you bring fresh ideas, energy, and possibly new technology that can breathe new life into an existing enterprise. The potential for economic growth is significant—acquired businesses can expand, create more jobs, and contribute to the local economy in ways that startups may take years to achieve. Studies have shown that companies acquired through ETA often see job creation and growth, sometimes even doubling their workforce. This is a win-win situation: the entrepreneur gains a thriving business, and the economy benefits from a stronger, more dynamic company.

How ETA Can Contribute to Canada’s Prosperity, Especially Among Underrepresented Groups

Canada is facing a looming small-business succession crisis. According to the Canadian Federation of Independent Business (CFIB), 76% of small-business owners plan to exit their businesses within the next decade. This could result in over $2 trillion of business assets changing hands. If these businesses aren’t acquired, they risk shutting down, leading to economic losses and job destruction.

Based on Statistics Canada data, the Canadian Chamber’s Business Data Lab (BDL) estimates around 54,000 Canadian businesses, representing 4% of all businesses, are currently up for sale. This significant figure presents a unique opportunity for aspiring entrepreneurs.

But there’s a silver lining here. ETA presents a golden opportunity for underrepresented groups to step into business ownership. For individuals from communities that have traditionally faced barriers to starting a business—such as women, immigrants, and racial minorities—acquiring an existing business can be a more accessible route to entrepreneurship. By acquiring a business, these individuals can bypass some startup challenges and immediately focus on growing and innovating within the company. This accelerates wealth creation and helps reduce economic inequality by providing more equitable access to business ownership.

From our initial research, the current community of ETA entrepreneurs in Canada does not reflect the diversity of Canada’s population. There are opportunities to support underrepresented entrepreneurs further to pursue ETA. 

Using Policy to Increase Access to Debt Financing for Entrepreneurs

One key challenge for entrepreneurs pursuing Entrepreneurship Through Acquisition (ETA) is access to financing. Acquiring a business typically requires significant capital—often well beyond the means of most aspiring entrepreneurs. However, it’s important to note that one doesn’t need to be a millionaire to pursue ETA. Entrepreneurs have various financing options, such as raising debt, negotiating seller financing, or leveraging search funds. Without the right financial support, many would-be entrepreneurs are shut out of this opportunity, unable to pursue their dreams of business ownership. This creates a significant barrier for individuals who may have the skills and drive to succeed but lack access to the necessary resources.

In the United States, the Small Business Administration (SBA) helps to alleviate this barrier by offering loan guarantees that make it easier for entrepreneurs to secure the financing needed to acquire a business. These SBA-backed loans reduce the risk for lenders, thus opening doors for entrepreneurs who otherwise might not be able to secure funding. It’s a proven model has enabled thousands of entrepreneurs to acquire and grow businesses successfully.

ETA also offers more creative options for those who don’t have substantial upfront capital. Seller financing is one approach where the current business owner agrees to finance part of the acquisition. Another option is raising debt, which allows entrepreneurs to leverage the business’s future earnings to secure financing. Perhaps most intriguing is the concept of search funds. This model involves investors backing a promising entrepreneur while searching for a business to acquire. Essentially, investors believe in the entrepreneur’s ability to find and run a successful business, so they provide the capital to finance both the search and the eventual acquisition. These alternatives to traditional financing help lower entry barriers, making ETA accessible even to those who aren’t independently wealthy.

Unfortunately, in Canada, we lack a mechanism like the SBA loan guarantee to support entrepreneurs pursuing ETA. This leaves Canadian entrepreneurs at a distinct disadvantage, often forcing them to rely on personal savings, high-interest loans, or raising capital from investors, which can dilute ownership and limit long-term potential. A comparable loan guarantee program in Canada could significantly level the playing field, enabling more aspiring entrepreneurs to pursue ETA and contribute to the economy through business ownership and job creation. The absence of such support stifles entrepreneurial ambition and limits the growth of small and medium-sized enterprises (SMEs), which are crucial drivers of the Canadian economy.

The Current and Future Opportunities for ETA in Canada

The opportunities for ETA in Canada are vast and growing. With the wave of retirements on the horizon, thousands of businesses will need new leadership. From small manufacturing firms in rural areas to tech companies in urban centers, the diversity of businesses available for acquisition means that there’s something for every aspiring entrepreneur, regardless of their background or interests.

Looking ahead, the demand for ETA is only set to increase. As more business owners are looking to retire and awareness of ETA grows, we can expect a surge in interest from young entrepreneurs eager to take the reins of established companies. However, this also means that competition for acquiring businesses will intensify, making it even more critical for aspiring entrepreneurs to be well-prepared.

Common Misconceptions About ETA

Despite its advantages, ETA is often misunderstood. Some believe that acquiring a business is less “entrepreneurial” than starting from scratch. However, this couldn’t be further from the truth. Successfully acquiring and running a business requires a high level of entrepreneurial skill—everything from strategic thinking and financial acumen to leadership and innovation. Another misconception is that ETA is only for those with deep pockets or extensive business experience. While it’s true that capital is required, with the right financing options and training, ETA can be accessible to a much wider range of people.

However, it’s crucial to dispel the notion that ETA is “easy money.” Acquiring a business might seem like a shortcut compared to the challenges of building a startup, but the reality is far more complex. Acquirers must navigate the intricacies of due diligence, negotiate purchase terms, secure financing, and then, perhaps the most challenging part, step into the leadership role of an existing business with established processes, culture, and market expectations. The hard work doesn’t stop once the acquisition is completed; that’s where the real work begins. Leading a company to sustained success involves solving operational issues, driving growth, managing employees, and often reinventing the business to stay competitive. This is no easy task and is certainly not a quick way to make a fortune.

Why Training in ETA Is Essential

Training is crucial, given the complexities of acquiring and running a business. ETA requires specific skills that differ from those needed to start a business from scratch. Understanding how to evaluate a business, secure financing, and manage a transition are just a few of the areas where training can make a significant difference. At Venture for Canada, we’ve seen firsthand the demand for this training.

What Venture for Canada Intends to Do About ETA Training in Canada

At Venture for Canada, we’re committed to expanding access to Entrepreneurship Through Acquisition (ETA) training because we believe in equipping Canadians with the tools they need to succeed. Recently, we launched a landing page to gauge interest in ETA training programs, and the response was overwhelming—approximately 300 individuals from across the country signed up quickly. These participants span diverse professional backgrounds, including those with experience in small businesses, private equity, and expertise in legal or accounting transitions for SMEs. We’ve also seen a strong interest from individuals holding leadership roles in major corporations. 

This interest underscores the immense potential of ETA to catalyze Canada’s future economic growth. Our upcoming Entrepreneurship Through Acquisition Academy will offer comprehensive training, covering everything from opportunity identification to financing and managing post-acquisition transitions. By offering targeted instruction tailored to these professional backgrounds, we’re empowering aspiring entrepreneurs with the specialized knowledge they need to succeed in this complex field.

Canada is on the verge of a small-business succession crisis, with countless businesses at risk of closure as their owners retire. ETA provides a critical solution by ensuring these businesses can transition smoothly to new ownership while continuing to thrive. But ETA isn’t just about keeping businesses afloat—it’s about using acquisition as a tool for economic renewal, job preservation, and even social equity. By fostering an environment where ETA is actively encouraged and supported, we can safeguard the legacy of Canada’s small-business community while unlocking opportunities for the next generation of entrepreneurial leaders.

The future of Canada’s economy hinges on innovation and adaptability. ETA offers a pathway to both by empowering individuals to take control of their future while preserving the businesses that form the backbone of our communities. With the right training and support, the next wave of Canadian entrepreneurs can drive economic growth and create a brighter, more prosperous future for everyone.

If you want to learn more, sign up here for updates about our application process.