I make this post periodically but rarely receive good feedback.
In the ~80s, the concept of a levered buyout was relatively new. PE firms were full on cowboys and creating the playbook as they went.
Where is that opportunity today?
Where can you deploy ~$10m - $20m and feasibly make ~$100m - $300m quickly?
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The independent sponsor space is likely the Wild West of PE today. Seems to be growing quickly and my team is leaning in hard here. We are co-investors providing equity to independent sponsors
What structure (FoF, FO, etc.) are you investing from? This space is definitely the lowest hanging fruit in PE with actual ability to make a 3x+ consistently. From the IS team's perspective they get paid a hell of a lot faster as well in carry.
We are investing out of a traditional fund structure but our anchor LP is a FO
My firm does co - investment as well. We like working with independent sponsors and emerging managers.
Can I dm u? Looking for capital
May I ask who breaks into such firms? Many thanks!
Yeah if you’re VP+, entrepreneurial, and tired of the politics required to make partner at any sizable PE fund, the independent sponsor route could be a nice way to carve your own path.
Can I dm u? Looking for capital
I had to look up what an "independent sponsor" was. Is this done for venture investments?
May I ask who breaks into such positions? Is this like direct placements by matt swain? Many thanks!
Yeah man I too want to make 100 to 300 million dollars quickly.
I don’t. I just want to make PowerPoints and get yelled at by boomers.
You need structural innovation to generate that kind of return profile and at least personally I don't see that anywhere in finance right now...
AI Roll-ups
For the same reasons I think PE was very attractive in the 80s, you can find some real opportunities in emerging economies businesses.
You need a competent operator that’s familiar with the business environment but the following are true:
- Significant capital constraints make capital a differentiator
- Low hanging fruit operationally o drive value
-Unsophisticated competitors
- Highly fragmented industries
I’ve been spending time on ERP implementation companies in LatAm and find it very interesting. Happy to chat further if this resonates.
Interested in learning more
Would love to chat, dm me?
Dm me
If we all knew where to 10x our money we would all be doing it. I think the unfortunate answer is that this opportunity doesn't really exist and if it does, you can't execute it quickly in terms of making a return. Private equity in the 1980s was the Wild West, but this doesn't exist anymore. It is rare or impossible to buy a company at a low valuation, lever it up, and flip it in 3-5 years in modern days. Even the best, most experienced firms are looking for other methods to create value.
I am skeptically bullish on evergreen/long term hold private equity in the lower middle market even though a lot of risks exist. I believe that firms that are patient and flexible with their capital have a lot of options to buy companies that are not ran well operationally. There are significant changes you can make in these businesses to help speed up growth. At the end of the road when/if you want to sell, you have investors with plenty of dry powder drooling for $10-20m EBITDA platform investments. But what do I know.
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