Take-Aways From MIT NEETA's ETA Conference

Booth ETA club asked for a short write-up of key takeaways from the MIT NEETA conference a few weeks ago, hoping some of the takeaways can help people here as well.

The conference was extremely high energy and there was a palpable excitement from investors to new entrants learning about it for the first time. It was well attended with about 300 people coming from across the country.

ETA modalities from lowest risk to highest risk: CXO Accelerator Traditional Self Funded

high-level target financials: 3-5x EBITA 5-50 mil revenue 20% - 50% ebita margins TAM between 100M to 1 billion to avoid larger players

Learnings from talking to investors & searchers: There is a significant talent gap in the United States that when paired with the upcoming retirement of small business owners gives bountiful opportunities. CXO program’s entire business model is built around this talent gap. The top business talent in the united states is coming from MBAs and going to consulting, banking, big tech (rip), or launching a startup. These with the exception of the startup have strict hierarchies that give incremental progress to MBAs slowly going from senior manager to director to senior director, etc. They are building holding companies to get phenomenal IRR and giving a shortcut to the C-suite in these “unsexy” industries or firms.

Tell your story, not just how you got to your MBA but your whole authentic self. Investors are betting on you so they want to know from your family growing up to today what made you who you are and why will that make you successful here.

Look for a moat or business that you cannot build due to a limiting regulation, licensing, locality cost, or another aspect. If you couldn’t go in and build it yourself, then in buying it the competitors couldn’t either.

When adding tech to any business to improve operations go slow. Identify your early adopters in the company and give it to them first, let them be your champions and brag how much better it makes things, then the others will come asking for it. Don’t be heavy-handed, the people actually have to use the tech and want to use it.

Deeply understand not just current sales but the pipeline of the company you are buying. If the earn-out is based on sales and the prior owner empties their pipeline hitting goals but hands you nothing then you have to build a new pipeline from scratch.

Get tough terms or values in the negotiations on paper and in front of the business owner fast. If it is a deal killer you want to know that early to avoid investing time in a dead deal.

This may be basic but you need a team even beyond your investors. You need lawyers, accountants, M&A advisers, community banks for debt raises, etc. Start building those relationships before you need them.

For your investors understand your own weak spots and find people who can cover them for you. Spread your investor expertise across the search, due diligence, operation, and exit segments of your search.

Get the business owner out of the office. Not on the first chat, that should be over the phone to be efficient. But after you confirm interest, get them out in the world and build your LOI together so you can build a human connection and they feel invested in the LOI you ultimately give them.

Deeply understand the formal AND informal responsibilities of the exec team members. This helps mitigate key person risk and understand if you are buying a business or a job.

At the end of the day, everything prior to operating the business is almost entirely sales. You have to sell investors, you have to sell to business owners, and after acquiring you are likely to head of sales for the business too. Know that and lean into it.

Consider an industry with a limp. Many searchers will go after tech/tech-enabled services or healthcare because there are high margins and ample opportunity which is great. Consider a business that goes against conventional search wisdom such as having a singular buyer (preferably the government) and gain a DEEP understanding of the industry so that you can mitigate that risk.

Regardless of the industry, you have to be as knowledgeable as possible so you know what questions to ask and owners feel comfortable with you running their business. Meet with 3-5 CEOs in that industry per week and really dig into their story and their business. Once you buy a business meet with your competitors, meet with other CEOs, meet with your employees, and meet with everyone who can give you perspective. You are the new kid on the block and you need to ramp up as fast as possible.

Inclusion is a huge factor in search right now and it is fantastic. The community is incredibly welcoming, generous, and supportive. These people want to see you win and if you come to the table having done your homework and shown a willingness to hustle you will be given a chance.