Apr 4, 2019
Opportunity knocks for new entrepreneurial acquisition course
When longtime Gies College of Business lecturer Mark Smith took a close look at the landscape of business courses being offered and talked with some close friends in the industry, he found one particular area with plenty of opportunity.
“Traditional entrepreneurship education is based on the idea that you’re going to start a business from scratch, like inventing a better mousetrap or coming up with a new service offering.” said Smith, who also teaches courses in financial markets and corporate finance. “I want get the message out to our students that acquisition entrepreneurship is a viable career path. This path can provide a tremendous amount of professional satisfaction, and can be very financially rewarding.”
As Smith set out to build this course from scratch, he networked with some of the nation’s leading ETA faculty, studied existing course offerings, and created a blended course that’s unique to Gies College of Business.
Students couldn’t wait. Demand for Smith’s first ETA course was so high that he had to move it to a larger classroom. Nearly 60 students enrolled. Smith estimates that about two-thirds are graduate students, most of whom are in the Master of Science in Finance program. The remaining one-third are senior undergraduate students.
“An important lesson I’ve learned is that acquiring a small business is possible for those who have an entrepreneurial mind,” said Eduardo Toledo da Silva, who is working toward his Master of Science in Finance. “We learned several advantages of acquiring versus starting a small business, mainly the company’s increased chances of survival.”
“I learned to constantly be looking to make and maintain connections because you never know what opportunities may come from them,” said Monia Zmudzki, a senior accountancy and finance major. “One course speaker spoke of maintaining valuable connections. By keeping in touch, that connection led him to the business he then acquired.”
The course is much more than just theory. Smith teaches practical applications and even gathers actual acquisition and banking data to use as real-life examples. He leans on a robust network of alumni to serve as guest lecturers. One of those alumni, Steve Vivian (MBA ’97), encouraged Smith to start the course.
“I am a big believer in exposing students to possible career paths they may not have thought of and may not even be aware of,” said Vivian, Principal & Founder of Kestrel Capital Group, an independent sponsor private equity firm. “I think many people believe entrepreneurship is only about start-ups. That isn’t the case. There are many ways for smart, capable, driven individuals to pursue an entrepreneurial career path.”
Vivian is one of several Gies Business alumni who have served as guest speakers for the course. Others included Dennis Beard (MBA ’94), VC General Partner at Serra Ventures; Mike Hedge (ACCY ’83), CEO of Birkey’s Farm Store, Inc.; Thane Hanson (ACCY ’91), President of Hanson Financial; and Jim Valete (FIN ’84), EVP/Small Business Banking and Government Guaranteed Lending at Busey Bank. Of the twelve guest speakers in the class, ten were University of Illinois alumni including the five Gies Business alumni.
“I am always happy to visit campus, and in this case, the Entrepreneurship through Acquisition course is something I am passionate about,” said Vivian, who wishes he could have taken a course like this in college. “I feel like if I would have been exposed to this concept, it really would have resonated with me.”
These alumni help complement Smith’s extensive background in entrepreneurship. Early in his career, Smith helped launch several software companies and has gone through the full start-up experience. Now he’s putting his professional background into practice at Gies Business. The main benefit to entrepreneurship through acquisition, Smith says, is a greatly reduced risk profile. Experts estimate fewer than one in ten business start-ups will survive, and even fewer than that ever truly succeed. Buying an existing small business, though, is a far safer and often more profitable venture.
“If you’re going to buy an existing business with existing customers, existing infrastructure, and existing product lines, the risk profile is tremendously reduced,” said Smith. “You analyze it, acquire it, and put your touch on it. You can bring your own operational, marketing, or sales expertise and really make a big impact.”
Much of the interest in this course is driven by opportunities within the industry. Smith – who is also a Serra Ventures limited partner and angel investor - believes acquisition entrepreneurship could grow by leaps and bounds over the next couple of decades, as a generation of baby boomers looks to retire and sell their businesses.
“I’ve read studies that say over the next two decades, most of the baby boomers who own businesses are going to want to sell them,” said Smith. “Annually tens of thousands of businesses are going to change hands over the next 15 to 20 years. ETA is a great career opportunity for our students to consider after obtaining several years of industry experience and broadening their contact network.”
Smith – who holds a PhD in Engineering from University of Illinois and an Illinois MBA with an entrepreneurial focus – believes this new course is a great opportunity for alumni to stay engaged. He’s hoping the course can connect younger alumni with those nearing retirement age, who are interested in mentoring and investing in the next generation.
“I have a bigger vision that hopefully we can play connect-the-dots for our alumni,” he said. “There are a lot of alumni who want to sell their businesses, and a lot of our alumni who want to buy businesses. Why can’t we connect them?”