Why hundreds of US MBAs are leaving high-paying jobs to clean air ducts and fix plumbing
A growing number of MBA graduates in the United States are choosing to leave traditional corporate careers to purchase and operate small, often unglamorous, businesses in sectors such as HVAC, plumbing, and car washing. This trend is part of a model known as Entrepreneurship Through Acquisition (ETA), more commonly referred to as “search funds”. It offers young professionals a pathway to business ownership without having to start from scratch.Search funds have gained significant momentum, especially since the Covid-19 pandemic, as thousands of MBA students have increasingly opted to acquire existing businesses rather than launch new start-ups. According to Stanford research cited by Business Insider, from 1984 to 2019, investors deployed a total of at least $1.4 billion into search funds and the companies acquired through them. In just the four years since, an additional $1.5 billion has been invested. Many of these MBAs are turning to industries traditionally overlooked by elite professionals, including duct cleaning, grease trap maintenance, and septic tank services.Dan Schweber’s shift from consultancy to ownershipDan Schweber, a former healthcare consultant and startup employee, enrolled in Columbia’s Executive MBA programme in search of a more autonomous and rewarding career path. After exploring multiple business ideas, he discovered Columbia’s elective course on search funds. As reported by Business Insider, Schweber decided to pursue the ETA model, drawn to the concept of acquiring a business with existing revenue, staff, and customers.To finance his search, Schweber raised $480,000 from 18 investors, which covered a two-year period of outreach, due diligence, and personal living expenses. He estimated that he would need to send 4,800 outreach emails per year to generate 500 introductory calls, leading to 50 in-person meetings and two signed letters of intent. His first attempt to acquire a fire safety business fell through after months of negotiation.From failed deals to air duct cleaningWith nearly two years into his search and no acquisition completed, Schweber shifted his focus from the healthcare industry to home and commercial services. He searched for HVAC-related businesses around Washington, DC, eventually identifying Atlantic Duct Cleaning. After 11 unanswered emails, he received a response to his 12th attempt.The owner, Tom Keys, had founded the company in 1995 and built it into a profitable enterprise generating $4 million annually. While private equity firms had made offers, Keys preferred to sell to someone who would maintain the business’s integrity and staff. Following a three-month due diligence process, Schweber secured financing from 15 of his original 18 investors, along with a loan from a private lender. The transaction was finalised on May 31, 2022, although the purchase price was not disclosed. Business Insider noted that the median price for companies bought by investor-backed searchers in 2022 and 2023 was $14.4 million.High returns drive investor interestSearch funds have become attractive to investors, largely due to the historically high returns. As per data reported by Business Insider, searchers have delivered an average return of 4.5x on capital, with an annual internal rate of return of 35%. This compares favourably with traditional asset classes such as the S&P 500, which typically yields 10% annually. The funding model allows investors to gain preferential access to deals once the searcher acquires a business.Challenges after acquisitionDespite the potential for high returns, 31% of searcher-led acquisitions result in losses for investors. Risks include undetected operational issues, macroeconomic downturns, or poor performance by first-time CEOs. Business Insider reported several cases where new owners faced financial strain, emotional stress, and the possibility of bankruptcy within the first year.Growth and future plansSchweber now serves as CEO of Atlantic Duct Cleaning, overseeing over 60 employees and a fleet of 30 trucks. As reported by Business Insider, his goal is to grow the company to $25 million in annual revenue by 2028, aiming to become the largest air duct cleaning firm on the East Coast, if not in the entire country.The rise in search funds reflects a broader shift in US business education and entrepreneurship, where owning a plumbing or duct cleaning business is now viewed as a viable—and potentially lucrative—career path for elite MBA graduates.
