Should I pursue Private Equity even though I've made 6 figures in Entrepreneurship?
Hey guys! I'm a long time lurker here on wallstreetoasis.
Originally, I grew up with the idea I'd join an investment bank and work my way up to PE. However, things changed and I've done somewhat well running my own business. To tell you guys about myself, I'm a recent college grad and over the last 4 years I've ran my own online business. Throughout this time, I've averaged around $125k and last year net over 250k.
However, things have changed. The business I'm in, there is a certain threshold that prevents you from growing. Like, I cannot scale this business to making 500k+. The business I run it's in a niche market, that's why I'll keep referring to it as business instead of saying what I'm actually doing. Recently, the business has slowed down, instead of averaging 20k a month, I'm now back at 10k. This has forced me to try and find new ideas and build other websites that can run itself. I feel like if I continued making websites and stuck to what I'm doing now, I can eventually scale this to making $30k/month. But, beyond that, I can't find myself to scale it further.
I'm trying my best to be professional and trying to show you guys the circumstances I'm facing. As people who have studied banking and private equity, I feel like your opinions will be better suited to answer my questions.
My current knowledge of PE/Banking
-I mean, I get the whole concept with banking, learning models, lbos, dcf modeling. However, I still have much to learn.
-I'm also currently a 2.8 student at a non target top 30 US school in the west coast.
My goal is eventually to be in private equity. I know that's almost everyone's goal, but I truly have a passion for buying & selling businesses. I'd like to work on deals that are $5m-250m, because I feel like working on deals this size, presents me more opportunity to rank up further in the company instead of a firm involved with M&A deals like Time warner and Spectrum merging. I feel like in those industries, you become an analyst, then a vp, president, etc and work your way up. Where as in smaller deals, you can truly learn something, and maybe even leave the firm and start your own fund.
My biggest confliction is this.
If I'm making 30k/month, what does it matter sitting at home behind a computer screen? I won't ever get the chance to see what goes behind these $5m-250M deals to give me different ideas.
If you see my current path, I'm stuck. I have 0 clue how to scale a company beyond 30k a month and what it takes. But, if I spent my time working on deals way bigger, I'd have more knowledge and connections, to actually starting a company that could make millions yearly. What I do now, it's not rocket science. There is no education behind it. I'm not learning anything besides sales.
But, I also face another fear. What do you really learn in PE and IB that will help you long term in starting a company? Learning spreadsheets won't help you make money.
I don't know. By making this post, I hope someone can guide me to a path I'm not currently seeking. Like let's say for example, I worked at a PE firm whose main focus was buying and selling hospices. I'd have the complete knowledge of what goes into running a multi million dollar hospice, how to run it, what to look for from a buying perspective, everything I'd basically need to know about a hospice. Then, I'd be able to get an investor, start my own hospice, and make it into a multi million dollar business. Am I just dreaming things, or is this how it works? I feel like I need ideas like this to help me succeed.
Also, to add to this, I feel like I can continue my path in running businesses. Save up for a few years and then buy a business of my own. For example, if in 5 years I have 2M. I can easily buy a business making $300-400k, with down payments, etc and have a networth of over 2M. That too, a 2M predicition is resonable, and if I'm able to find better ideas, I may grow further. But if I worked at a PE firm or IB firm. I'd be making $80k, $90k, $120k, $150k, $170k. (I'd say these are decent estimates for first 5 years right?) But most of my money would be spent in rent, food, etc. In 5 years I'd have very little to no net worth.
m_1 probably can provide some insight
not sure about the PE path, but your business definitely could be PE-backed to break new grounds
It can't be PE backed. If I stop working today, it's basically over. Hard to find an employee to replace what I do. But, that's my focus! How do I break into PE a completely non traditional way, where I can bring value to PE guys?
Elaborate more on what exactly your business is and we can give you better ideas - everyone in online biz thinks what they do is unique / niche but in reality it hardly is...
Second the above. What's the business?
It involves sales locally. Really irrelevant.
Anyone?
Traditional route is likely out the window for you but that doesn’t mean you can’t break into PE. like most people on this site would tell you, the most common way to get to PE is by going through an analyst program at an IB. IB recruitment pretty much starts day 1 of sophomore year for most places now, which sounds like you might have missed that boat. Unfortunately this will likely take a lot of the MFs and UMM / Top Mm funds out of the picture, but PE is a very diverse space with tons of opportunities outside of those brand names
To the extent that you have a business you feel is truly scalable with additional capital, you should definitely be reaching out to small PE shops, preferably ones that invest in your niche market (maybe even family offices) and trying to schedule meetings. if you show them a business with stable cash flows and sizeable growth over 4 years in a “niche,” some will at least take the time to hear you out as that is pretty much the cookie cutter definition of where a S/MM PE fund likes to play. This gets you in the door with the opportunity to pitch (interview). You’re most valuable asset with regards to convincing a fund to let you through their doors without being molded by a banking program is the fact that you have already demonstrated business savvy and investing savvy and grown a business. While it is not traditional that is certainly valued by the people in PE who know what they are doing.
Adipisci eveniet inventore cum ea voluptas et reprehenderit assumenda. Porro iure alias eos fugiat est. Nam distinctio nam ullam quia ut quia velit. Ratione omnis et et delectus. Sit quam eos ut dolores natus eum. Eum rem culpa eveniet magni quo ad. Veritatis esse inventore aut id.
Illum ut ut ut earum molestias. Consectetur ut sit qui autem dolore. Perspiciatis qui quasi omnis.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...