Top 5 ETA Business Categories for Aspiring Owners

Entrepreneurship Through Acquisition (ETA) offers an appealing route to business ownership. Rather than building a new company, ETA searchers acquire established, profitable businesses. According to recent data from Stanford and other industry sources, the most successful ETA acquisitions typically concentrate in a handful of business types known for steady performance and long-term viability.

This post highlights the top 5 business categories that consistently appear in ETA deal data. By focusing on current trends and providing key metrics, you'll gain clear insights into where ETA activity is strongest—and why these sectors are so attractive to buyers.

What Makes an Industry Attractive for ETA?

ETA entrepreneurs consistently seek "boring but beautiful" businesses with essentials such as:

• Recurring Revenue: Predictable sales from contracts or repeat customers; over 70% of ETA-acquired firms have this trait.

• Stable Cash Flow: EBITDA margins are often in the 10–30% range.

• Fragmented Markets: Most acquired firms operate in sectors with hundreds or thousands of independent competitors.

• Succession Needs: As of 2024, more than 50% of U.S. small business owners are over age 55, driving market supply.

• Low Customer Concentration: The top customer usually makes up less than 15% of revenues.

These features lower risk and support sustainable growth for new owners.

The Top 5 Business Categories for ETA

1. Healthcare Services Platforms

Healthcare accounts for about 24% of all ETA and search fund acquisitions since 2014. Demand for home health, specialty clinics, and outpatient services remains steady even during downturns, driven by demographic shifts like an aging population. These businesses often benefit from recurring revenue through ongoing care contracts and strong regulatory barriers that limit new competition.

2. Business Services (B2B)

Representing roughly 26% of deals, B2B service companies provide essential functions to other businesses, such as facility management, commercial cleaning, marketing, and back-office support. Their reliance on long-term commercial contracts and high client retention rates creates predictable cash flow. The B2B sector also features fragmented markets ripe for consolidation, offering growth opportunities for new owners.

3. Tech-Enabled Services

Tech-enabled services have steadily risen and now consistently rank among the top targets for ETA buyers. This category includes managed IT services, analytics firms, and tech-based outsourced solutions. These businesses appeal due to their scalable models, high gross margins, recurring revenue, and ability to adapt quickly to market changes as technology evolves.

4. Software (Vertical or B2B SaaS)

Software, particularly vertical and B2B SaaS businesses, makes up about 22% of recent acquisitions. These companies often operate on a subscription model with low churn, meaning customers rarely leave once integrated. High gross margins, scalable infrastructure, and predictable revenues are key draws, especially with the growing digitalization of business processes.

5. Light Manufacturing and Industrial Services

Although accounting for a smaller share (8–12%) of ETA deals, light manufacturing and industrial services remain highly attractive. These firms produce specialized parts or offer critical maintenance to industrial clients, often under multi-year contracts. Their customer bases are loyal thanks to high switching costs, and the fragmented nature of the industry allows new acquirers to expand through bolt-on acquisitions.

High-Level Patterns in ETA Acquisitions

• The Top Five Categories Dominate: Healthcare services, business services, tech-enabled services, software, and light manufacturing together account for approximately 75% of all ETA acquisitions.

• Services Lead the Pack: Healthcare and business services alone consistently make up about half of acquisitions, driven by their recurring revenue and stable demand.

• Tech’s Significant Contribution: Software and tech-enabled services now represent over 20% of ETA deal flow, reflecting a shift toward digital and scalable business models.

• Manufacturing Remains Strong: Light manufacturing and industrial services continue to comprise a substantial share, appealing for their loyal customer bases and steady contracts.

• Other Sectors Less Frequent: Outside these top five, categories like distribution and trades make up a smaller—yet still valuable—portion of ETA acquisitions.

These business categories have a proven track record, consistently ranking at the top of ETA market data for over a decade. Focusing your search within these sectors will align you with the model’s strengths: stable earnings, fragmented industries, and a wealth of retiring sellers. Whether your interest is in healthcare resilience, B2B recurring contracts, or the growth potential of SaaS, these fields are where most successful ETA entrepreneurs find their start.