The Overlooked Asset Class

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Most acquisition stories start with access to capital. Tarrus Richardson's started with the loss of it.

By 2010 he was near bankrupt, fired from the institutional private equity world where he had spent nearly a decade, and unable to get a single check written despite a Harvard MBA and a real track record. He grew up on the West Side of Chicago, where he watched his parents buy businesses when he was a kid. He went to Harvard Business School, worked M&A at Salomon Brothers and JLL Partners, and co-founded ICV Partners, helping raise $440 million across two funds. Then it all came apart.

The comeback was a structural insight. In 2014 he found a small IT staffing business in Pennsylvania. The founders wanted a full exit, and every other buyer offered to buy 100%. Tarrus offered to buy 51% and keep the founders on as partners, something no one else had put on the table. When he ran short of capital before closing, he asked the sellers to finance his portion with a seller note and pledged his house. He closed with no cash down.

That first deal returned 4x. The second returned 15x. The third returned 27x. The model has a name: ETA, entrepreneurship through acquisition. It sits between venture and traditional buyout, with stable cash flow businesses as the underlying asset, bought with seller and bank financing and improved over time. Tarrus now runs an investor base 149 deep, roughly half of them accredited and using 401(k) rollovers to participate.

His own framing for what he does is plain. Other people collect cars. He collects businesses, twenty or more of them, and counting.

Three takeaways from the conversation

The structure mattered more than the capital

Tarrus describes a deal he closed with no money down because he built it differently than everyone else. He offered to buy 51% instead of 100%, which gave the sellers a reason to stay on and win with him, then asked them to finance his portion with a seller note. The capital he did not have stopped being the obstacle once the structure gave the sellers a second bite at the apple.

Pick the asset class before you pick the deal

Tarrus's read is that most startups fail more than 80% of the time, and you only ever hear about the ones that win. His conclusion after Harvard, Wall Street, and a decade in institutional private equity is that you succeed in life by getting the asset class decision right. He chose proven, stable cash flow over the lottery ticket, and built his wealth on the businesses most high earners walk past.

Serve the apprenticeship before the capital

For all his pedigree, Tarrus treats the acquisition path as an apprenticeship you serve first. His words are to train and learn on someone else's watch: back a deal or two as a financing source or operating partner before you write your own check. He spent nine years learning the game before running his first deal, because he knew he could not see what he had not yet seen.

Watch the full conversation

About this guest

Tarrus Richardson is the Founder and CEO of IMB Partners, a private investment firm with $1.2 billion in revenues, making him the first Black independent sponsor to reach that milestone. IMB acquires middle market companies serving utilities and government agencies, and he also manages a $125 million SBIC fund backed by more than 100 investors. He previously co-founded ICV Partners and worked in M&A at Salomon Brothers and JLL Partners, and he holds a BS in Accounting from Purdue and an MBA from Harvard Business School.

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