Searching as a Woman
In the past couple of years, the number of searchers who are women has grown rapidly. Many are finding search as an attractive alternative to attaining independence and autonomy either right after getting their MBA, or several years later. A decade ago, there were only a few “pioneering role models”, but now with over a dozen active searchers and at least a dozen more who have completed their search, new searchers who are women can now directly tap those ahead of them on this path about their experiences and potential challenges.
My standard advice to anyone considering Entrepreneurship through Acquisition (EtA) is to seek out to at least 25 searchers before they commit, to be sure that search is right for them, where they should search from, with whom, and how to fund the search if they decide to move forward. Seeking out other’s experiences to make an “informed decision” that is difficult to undo and with consequences that can last as long as a few decades is crucial. For women, this process is much easier now that there is a critical mass of searchers and searcher/CEOs to reach out to.
I recently moderated a panel of searchers who are women at Harvard Business School sponsored by the EtA Club and Women’s Student Association. I also solicited input from a dozen searchers who are women, not only from HBS, and built on my research for a recent Blog Post – Searching as a Couple that highlighted a number of other trends. This blog post shares what women say about their own experiences and their own opinions.
In the graduating classes of 2016 & 2017 at HBS, women made up 15% of the searchers while the admission statistics is slightly above 40%, a significant under-representation, but a big jump from only 1 in the decade before that! A recent grad commented, “I went to the Stanford search conference in September 2017 and it felt like 100:1 ratio of men to women. It was awkward and a little uncomfortable – I’m not going to downplay that. Instead, I chose to acknowledge it, and think about how worse that ratio would be if I weren’t in the room.”
The recent HBS graduates launched solo, self-funded searches, their reasoning being a desire for independence, autonomy and control over their search geography. As Martinique Grigg at Grant Peak Capital, who searched with a partner after they both left Amazon, explained, “You get substantial equity, an amount of control on what happens to that equity and/or you have the opportunity to influence the outcome in a way that you wouldn’t get at a large business.”
Searching as a couple, another increasing trend, finds searchers referring to themselves as a “wife and husband team” and two of these partnerships recently closed deals for a travel services business and a document editing business. As one couple points out, “You need to know each other well beforehand, including each other’s working habits and strengths/weaknesses. We trust each other’s work and each of us believes that the other was the best partner we could have for this journey.”
Seller profile and attitudes
There is nothing particularly unique about the businesses that are being purchased by women. Over the years, they have included: a retail bookstore chain, molded rubber parts, call center, gift baskets, technical training school, editing services, software for emergency services, property management, legal forensics, travel services and a food processing facility.
A few women report that their response rates are somewhat lower than their male counterparts because the ideal seller profile is generally an older male with perhaps traditional gender views. It will take a while for these attitudes to change, but there are still many seller prospects both male and female. One searcher found, “If you’re having trouble with a male owner, try finding out if they have a daughter.” However, according to the Small Business Association (SBA), 35% of family-owned businesses in the USA are run by husband/wife teams and 40% are women-owned. Linda and Mike Katz at Molded Dimensions reported “Being a Woman-Owned Business gives you an edge with some large customers”. Another said she told her brokers “Bring me a women-owned business, they are on the top of my list. It was a way to distinguish me from other buyers, and they remembered!”
Helena Divisova of Generation Transfer in the Czech Republic observed, “Certain industries are guy clubs. The owners won’t take you seriously unless you are one of “them”. So, I take my husband with me as a technical advisor and we’ve had great feedback. In any case, my belief is that once I’m in, I will have plenty of time to show everyone that a woman can run this show. Forget these industries if you can’t do this.”
In somewhat of a “blind test” one searcher reported that she and her fiancée conducted separate searches at different times and found that “There was no difference between my search process and his. There was the benefit of being a woman with more people wanting to talk to me out of curiosity; or my being more personable because WOMEN ARE! Ignore the common narrative about this being hard for women – it is hard for everybody.” Another observed that she “found that the hedge fund world she had been in had a lot more bias than she found while searching”.
In a blog titled “Woman with a business” searcher Clara Veniard, a partner at Grant Peak Capital, writes “In fact, being women has become an advantage for us. At least a few female business owners told us they would give us preference over other male buyers. One owner offered to sell us her business for $1 million less than the other buyers (on a $15 million valuation).” No different than many other searchers, Martinique Grigg, who launched a search with Clara 9 years after graduating with an MBA, reflected that, “We were impatient to close on a specific deal. We had to do a reset and remind ourselves that closing no deal is better than closing a bad deal.”
Many reported the importance of attaining family balance that can come with an acquired business. Helena Divisova pointed out that “Search can be a great career path for a new mom. I started searching when my son was 6 months. I can work 40-50 hours on search and still spend 40 waking hours with my son. I can organize my work around my family and not vice-versa. I realize that I might take a few months longer to find a business than someone who searches 90 hours a week but that’s a trade-off that I’m willing to make.”
Another searcher observed, “Change the conversation: this can be a GREAT career choice for women. Yes, you work hard, but you have control and flexibility – two very important things that allow you to have both a fulfilling career and family life.” Sarah Moore at Kenston Green says, “I could just not imagine having a boss again. I had no obligations, except to me, so this was the perfect time to search. I could never work in corporate America. I worked out of a library with my interns and my local search basically only cost me only my living expenses.”
Linda Katz and at least one other searcher was pregnant while searching and did not feel that it got in the way of seller conversations and also cited the scheduling flexibility they experienced. On a more personal note, one searcher gave this tip, “Dress not to impress. Heels and dresses on a facility tour raise eyebrows, not credibility. My favorite are neutral trousers, colorful blouse and flats. I also like to tie my hair up and roll up my sleeves to be more informal.”
While there may be conscious and unconscious bias toward women across sellers, investors, brokers, bankers and various professional services, one searcher had a commonly shared response, “If you get any pushback from brokers, owners, or anyone else, just move on, it is not worth your time and there are plenty more out there!”
Finding support and advice was addressed by Sarah Moore who says “My best advice came from other searchers in the community. We don’t really compete, and they were always willing to share their experience with me.” Another reflected that she “was able to find many of my deals sourced from other searchers who felt the businesses were more suited to my unique criteria.”
With the increasing exposure from the #metoo movement, a searcher commented that she “never felt scared or concerned about my safety in meeting with any men. I just never acknowledged their awkward comments and kept the conversation going, it was harmless. I have never really had any problems being a female in these situations.”
Failure is on top of anyone’s mind as they consider entrepreneurship, whether it be a start-up or search. One searcher felt, “What if I fail to find a business, which may apply to searchers of any gender? The learnings are what matter to me, and that 2-3 years, in the lifespan of my career is a blip. Personally, I have no desire to work for others, and if the search fails I am most likely to try something else that is also entrepreneurial.” A number women who “failed to find” a business to purchase, reverted to pursuing a start-up based on many of the skills they developed during their search.
While experience in finance or investment banking may be helpful to searchers, many women are concerned about handling the numbers based on their past work experience. Trish Higgins at Chenmark says, “This is probably the primary reason why women don’t pursue search. Even though I had experience, it had basically zero relevance. All that you will need, whether making projections or understanding cash flow for the business can all be learned by doing, while you are experiencing it. You can overcome these fears; it is frankly not that hard, it will not be an issue. Most sellers are not financially sophisticated anyway.” Many searchers who are male have had success at search with educational backgrouns ranging from religious studies to biology and no relevant business experience.
Another searcher said, “In any case, the financial part is a small piece of the process that includes prospecting, negotiations, diligence, dealing with banks, and finally running the business. Don’t doubt yourself, this is all about creative problem solving and being resourceful. In fact, it might be better that you don’t over analyze the financials! The valuations are basic and based on a multiple, not necessarily a lot of modeling.”
Some expressed concern about being young and inexperienced. Trish Higgins responded to this, “most of these owners started their businesses when they were young. Mostly, they value authenticity. Relationship and trust is what these transactions are all about and it must be built up over time by them respecting you and your process. Just be yourself and the right deal will come across that will work for you. A lot of the times there is a spouse in the background who has a strong influence on the seller and that has worked well for me.” Katie Sullivan at Golden Bird says, “My husband and I started a search where I am serving as the primary searcher. I have received nothing but positive feedback from the network of investors, brokers and resources I am building. Sellers seem highly interested in my story and the process in general!”
Others worry about their acceptance within the search community and Katie Burton of Cardinal Bridge gave her own view, “I believe that women will find confidence in bringing a unique perspective to the search community, and the search community has been excited to welcome it. While there are considerations unique to women within search, there are distinct advantages as well.”
With the growing success of women searchers, it has never been easier to determine if search is the right career path by looking at examples of others. The entire search community can benefit from the added diversity while individual searchers can benefit from shared experiences to help them navigate through this challenging path to be a CEO/Owner! In my opinion, there is no need to set up anything “special” for women, just an unbiased recognition that they are searchers!
Given the continued gender bias in other career choices, Entrepreneurship through Acquisition is an option that should be considered at any point in a woman’s career, not just upon graduating with an MBA.
Feel free to share some of your own best practices or experiences in dealing with these issues in the blog comments. I encourage comments and dialog, allowing all to learn from both my views and the views of others – a virtuous learning cycle. Jump right in! These individual blog posts get updated frequently and I add to the Reference section and Search tips regularly, so visit the www.jimsteinsharpe.com website so come back to the site from time to time.