Has anyone seen successful examples of someone who deliberately pursued an "entrepreneurship through apprenticeship" model rather than a more traditional "entrepreneurship through acquisition" search?
I'm particularly interested in cases where individuals sought out roles under owners / operators with the explicit intent of acquiring the business after working in it for several years - I think that, hypothetically, an apprenticeship approach could offer advantages for both the seller and the aspiring entrepreneur compared to a standard acquisition, but I'm skeptical about how it stacks up against reality.
For the seller, I'd imagine an apprenticeship model would provide more confidence in who will carry forward the legacy of their business. It could also eliminate the time and dollar expense of engaging a broker or bank for the sale. Because the aspiring entrepreneur would be embedded in the business, employees / customers would presumably be familiar with them, minimizing disruptions to the business during the transaction. In terms of the sale itself, the seller would give up the price discovery that a brokered sale would provide but - if they value a smooth transition over maximizing sale price - maybe they're OK with that.
For the aspiring entrepreneur, you could look at the apprenticeship as paid due diligence over several years (and a long-term job interview), hopefully ensuring a strong personal fit before the transaction. If the entrepreneur plans to use an SBA loan, the apprenticeship could give them confidence in their ability to service the debt and take on a personal guarantee. A drawback is that they would ultimately have to pay for any growth in the business that occurs during their apprenticeship, potentially misaligning incentives (i.e., they may be inclined to delay value-creating initiatives until after their purchase).
Given all of this, it would seem particularly important to i) find the right owner / business to apprentice under and ii) be thoughtful and transparent about the apprenticeship arrangement. Regarding the apprenticeship arrangement, I'd imagine both parties would want the ability to walk away from a transaction if they don't want to go through with it and - if price discovery is very important for the seller - perhaps they could agree to run a more formal sale process but give the aspiring entrepreneur a ROFR on any offers that come in.
Where the approach might break down in reality is that: i) when an owner emotionally decides to sell, they probably don't want to wait several years for a transaction, ii) the average aspiring entrepreneur likely won't want to trade several low-salary years at an SMB in exchange for a (potentially) good look at a deal, and iii) the average aspiring entrepreneur probably doesn't want to risk getting strung along for years by an owner who "wants" to sell but ultimately kicks the can on the transaction.
I’d love to hear if anyone has firsthand experience with this approach or has seen it successfully executed. Thank you.
