Entrepreneurship Through Acquisition -- Insights from Harvard Business School Experts

**SPEAKER_1** (0:02)
Welcome to M&A Talk, the number one podcast on all things related to mergers and acquisitions. Brought to you by Morgan & Westfield, a nationwide leader in mergers and acquisitions for small to mid-market companies. We bring you exclusive interviews with industry experts in business sales, valuation, private equity, investment banking, and more. It's our mission to provide you with insight and guidance on how to build your company's bottom line and maximize value for eventual sale. Here's your host, Jacob.

**Jacob Moros** (0:34)
This is Jacob Moros, your host and president of Morgan & Westfield, a nationwide M&A firm.
And if you have a company that you're considering selling, and if you'd like to work with me throughout the process, you can schedule a free consultation at morganandwestfield.com or if you'd like a free copy of one of my two recent books, you can send an email to podcast at morganandwestfield.com. That is The Art of the Exit and Acquired. Art of the Exit is for selling companies with 1-10 million in annual revenue, and Acquired is for selling companies with 10-100 million in revenue. And now on to today's show, we're going to talk with Royce Yudkoff and Rick Ruback, both of whom teach at the Harvard Business School and have created a program on how to buy a business. And Rick and Royce, welcome to the show.

**Royce Yudkoff** (1:30)
It's a pleasure to be here, Jacob.

**Rick Ruback** (1:31)
Yeah, thank you for having us.

**Jacob Moros** (1:33)
So you guys are specialists in buying a business. You've created a program that you teach at Harvard Business School. In a nutshell, what's the purpose of that program?

**Royce Yudkoff** (1:42)
You know, many of our MBA candidates come to the school wanting to be general managers, and many of them want to express that as entrepreneurs. But they're often not sure how, or they've only focused on entrepreneurship through startup.
What Rick and I have been doing is presenting them with a whole different path, entrepreneurship through acquisition, which means finding high quality, enduringly profitable business with a founder who's marching towards retirement, buying that company with some kind of transition with the founder, and reducing the risks of entrepreneurship immensely.

**Rick Ruback** (2:21)
We also teach about small business generally, talk a lot about the operational challenges of small business, why corporate finance is in many ways more challenging in a smaller firm than in a bigger firm. Talk a little bit about the life cycle of that process.

**Jacob Moros** (2:36)
What's your background in a nutshell, your business buying experience background?

**Rick Ruback** (2:41)
Well, Royce's background is much more impressive than mine. I'm a lifelong academic, got my PhD at 25 and have been at MIT and then Harvard Business School for the last 37 years. So if you Google old professor, you might come up with my picture. I've been at Harvard for 37 years and before that, MIT for six or seven. So I'm a lifelong academic, have always been a consultant and always been fascinated with business. The buying started really as part of my partnership with Royce. When we began the small business program, our first course and Royce can speak for himself, but he has over a quarter century of experience of buying businesses at the highest level and performing at his private equity firm performed, I think.
It was like the top of the list for a long, long time, right Royce?

**Royce Yudkoff** (3:34)
Yes, Rick.

**Jacob Moros** (3:35)
Yeah, Royce, why don't you give us your background in a nutshell?

**Royce Yudkoff** (3:37)
Sure. I don't have a PhD. I'm not a formally trained academic. I did graduate as an MBA from HBS. After a few years, I founded a private equity firm, focused on middle-market business services companies.
Since founding, the firm has now completed about $80 billion of leveraged investment transactions.
I ran the firm for a quarter century. I was invited to come back to the Harvard Business School, which was very meaningful to me. Rick and I partnered up and we created this program together. The one other thing I'd say about our experience is, it's very much in the Harvard Business School mode for faculty to be deeply engaged in the sort of commerce of what they teach. Along the way, we've become investors in smaller firms. That has both been a useful thing for us to do, but really helped our teaching because we're engaged every day in the activities of acquisition and oversight of smaller firms through the entrepreneurs who we've backed.

**Jacob Moros** (4:37)
So providers of capital to the searchers?

**Royce Yudkoff** (4:39)
And advice, we sit on the boards and really help the first time CEOs through the challenges that they face.