Entrepreneurship Through Acquisition (ETA): How to Fund Your Search, and Why Your Broker Should Be a Key Partner

Not every entrepreneur starts from scratch. A growing number of operators, often from corporate, consulting or finance backgrounds, are taking a different route: finding a profitable, established business, buying it, and running it themselves. It's called entrepreneurship through acquisition, or ETA.

Instead of spending years proving an idea, an ETA buyer starts on day one with customers, staff, cash flow and a track record. But the business has to be paid for, and for most searchers that means debt. How well that debt is structured often decides whether the deal happens at all, and whether the business thrives afterwards.

What Is Entrepreneurship Through Acquisition?

ETA is the path of buying an existing small or mid-sized business and stepping in as owner-operator, usually as CEO or managing director. The buyer, often called a "searcher", looks for a business with stable earnings, loyal customers and room to grow, often one whose owner is ready to retire with no family succession plan.

Australia has a large wave of business owners approaching retirement. Many run solid, profitable businesses with no obvious successor. For a capable operator, that creates real opportunity.

The Main ETA Models

• Self-funded search. The searcher funds their own search, finds a business, then raises equity and debt deal by deal. They keep more ownership but carry the search costs themselves.
• Traditional search fund. Investors fund the searcher's salary and costs during the search, in return for the right to invest in the acquisition. The searcher typically earns a meaningful equity stake over time.
• Partnership search. Two searchers share the work, the cost and, eventually, the leadership of the business.
• Corporate-backed or incubated search. A holding company or investor group backs searchers with capital, support and a shared playbook.

Whichever model you choose, almost every ETA acquisition uses debt. Borrowing part of the price means less equity to raise, less dilution for you and your investors, and a better return if the business performs.

How an ETA Acquisition Is Typically Funded

Here's an illustrative structure for a business with $1 million of annual EBITDA (earnings before interest, tax, depreciation and amortisation), bought for $3.5 million:

Figures are illustrative. The right mix depends on the business, the industry, the security available and the lender. Equity contributions in business acquisitions typically range from 20% to 40% of the price.

Unlike the US, where many searchers use government-guaranteed SBA loans, Australia has no widely used equivalent for business acquisitions. That makes lender selection and deal structure even more important here. Searchers who assume US-style leverage is available often have to rework their deal late in the process.

What Lenders Look For in an ETA Buyer

• A business with stable, provable earnings. Several years of financials, with add-backs that stand up to scrutiny.
• Your relevant experience. Lenders don't need you to have run this exact business, but they want to see leadership, commercial or industry experience that gives them confidence you can.
• A transition plan. How the outgoing owner hands over relationships, and how long they stay involved. Key-person risk is one of the biggest concerns in any ETA deal.
• Meaningful equity. Your own money in the deal shows commitment.
• Debt service capacity. Enough cash flow to cover repayments comfortably, with headroom for a softer year.
• Security. Business assets, and usually personal guarantees from the buyer. Property can reduce the equity required.

For the full list of documents and the metrics banks use, see the acquisition finance checklist.

Why Your Broker Should Be a Key Partner, Not a Last Step

Many first-time buyers treat finance as the last box to tick: find the business, agree the price, then look for a loan. That's the most common reason ETA deals fall over or end up with a weaker structure than they needed. A good commercial broker adds the most value when brought in early, and stays involved long after settlement.

1. Before you search: know your buying power. We assess your personal position, available equity and investor support, then show you what size of business you can realistically fund. That lets you set your search criteria (your "buy box") around deals that can actually be financed.

2. While searching: be a credible buyer. Brokers and vendors take buyers more seriously when they can show their funding has been considered. We can give you a view of lender appetite for the kind of business you're targeting, so you can move with confidence when the right one appears.

3. Before signing a letter of intent: test the structure. The price, vendor finance, earn-outs, working capital and timing in your offer all affect how a lender sees the deal. We test the structure with lenders before you commit, so you don't sign terms that can't be funded.

4. During due diligence: align with what lenders need. Lenders and your own advisers look at many of the same things. We make sure the financial due diligence answers the lender's questions too, avoiding duplicated work and late surprises. See the due diligence checklist.

5. Credit and settlement: run the tender. We present the deal the way credit teams assess risk, tender it across banks, non-banks and private credit, and negotiate the term sheets: rate, amortisation, covenants, guarantees and security. Then we manage conditions and documentation through to settlement.

6. After settlement: a partner for the next stage. Your financing needs don't end at settlement. We help with covenant reporting and annual reviews, working capital as the business grows, refinancing once you've built a track record, and funding bolt-on acquisitions if you grow by buying more businesses. See roll-up acquisitions.

What to Look For in a Broker

• Acquisition experience. Funding a business purchase is very different from a property loan. Ask how many acquisitions they've funded.
• A wide lender panel. Including major banks, second-tier banks, non-banks and private credit, because the best lender for an ETA deal isn't always the obvious one.
• Banking insight. Brokers who've worked inside banks know how credit committees think and what makes a deal approvable.
• Honesty. A good broker tells you early if a deal can't be funded on the terms you want, before you spend money on lawyers and accountants.
• A long-term view. Someone who'll still be there for your annual review, your next acquisition and your eventual exit.

Common Mistakes Searchers Make

• Agreeing a price before testing whether it can be funded.
• Relying on add-backs a lender won't accept.
• Underestimating the working capital the business needs after settlement.
• Leaving no room for vendor finance or an earn-out in negotiations.
• A transition period that's too short for customer and supplier relationships to move across.
• Approaching one bank, being declined, and assuming the deal can't be done.

Start the Conversation Early

Whether you're about to start your search or already have a business in your sights, the earlier we're involved, the more options you'll have. Read more about business acquisition finance, how to buy a business, vendor finance and our guide for first-time buyers moving from a corporate career.

Book a free, no-obligation consultation and we'll show you what you can fund and how to structure it.