An article in yesterday’s New York Times describes search funds, or venture capital firms that use recent MBAs to identify midmarket acquisition targets, which the funds buy, and the MBAs help to run for one or two years. In about a quarter of the cases, these investments return thirty percent, making a lot of money for everyone involved. This business model started at Stanford twenty-five years ago.

This is the way a search fund typically works: One or two ambitious graduates of a top-tier business school, who want to run their own business but recognize they lack practical experience, offer themselves as fledgling entrepreneurs who can make some tough-minded investors a lot of money.

Read the rest of the article, part of Bill Bowers’ small business and entrepreneurship column, “In The Hunt,” here.