A brief history
Lewis Cullman and his partner Herb Weiner brokered one of the first known "leveraged buyouts" of Orkin Exterminating Company for $62.4 million. The purchase was structured with a $40 million loan from Prudential Insurance, $10 million in equity from Rollins Broadcasting (via a loan from Chase Bank), $10 million in sellers' notes, $2.4 million of Orkin's cash on hand — and only $1,000 of Cullman's own personal cash.
Jerome Kohlberg, Jr., Henry Kravis, and George R. Roberts through KKR approached A.J. Industries' board and offered to acquire the firm for $5 a share in April 1977, totaling $26 million.
Professor Irving Grousbeck at Stanford's Graduate School of Business coins the term "Search Fund," which focuses on giving young aspiring entrepreneurs the opportunity to search for, acquire, manage, and grow a company.
Stanford Graduate School of Business conducts the first widely known search fund study, surveying 46 first-time search funds.
Stanford GSB's annual search fund study (681 known search funds formed in the U.S. and Canada since 1984) reports a 35% gross IRR returned to investors during a 40-year period and $6.09m average equity earned per entrepreneur.
The Great Ownership Transfer
By 2035, some six million small and medium-sized businesses (SMBs) will face ownership transitions as baby boomers retire, according to a February 2026 study by McKinsey's Institute for Economic Mobility. Yet the same study found that in 2022, out of 510,000 SMBs that exited the market, 92% exited via closure, with the remaining 8% completed as sales or new owners (often intergenerationally to family members).
For many states, including New York, this means that hundreds of thousands of SMBs will need new owners to sustain economic growth and preserve critical statewide supply chains.
“Many established public sector contractors seeking growth lack a succession plan that secures wealth and sustains the supply chain driving economic growth and infrastructure development statewide. ETA offers a responsible pathway, preserving local businesses, supporting economic growth, and empowering new business leaders to build for the future.”
Carrie Torres, Director of Opportunity Programs, Dormitory Authority, State of New York
Sustinable models of entrepreneurship
At the same time, many aspiring entrepreneurs and mid-career executives seek greater ownership opportunity in their careers. For many, acquiring and operating an existing business can offer a more practical and durable path to ownership than building one from the ground up. This approach is known as Entrepreneurship Through Acquisition (ETA), also commonly known as a search fund.
$6.09m
average equity earned per entrepreneur
35%
gross IRR returned to investors during a 40-year period
Source: 2024 Search Fund Study, Stanford Graduate School of Business (681 known search funds formed in the U.S. and Canada since 1984)
“Some would-be entrepreneurs are better suited to acquiring, operating, and scaling a sound company than building one from the ground up.”
Cynthia Franklin, Executive Director of the Berkley Center
ETA NYC: A new platform for sustainable economic development
Through a strategic public-private partnership between NYU Stern's Berkley Center for Entrepreneurship and the Participation Fund, ETA NYC was established to serve as a new platform for sustainable economic development across the State of New York and beyond.