Entrepreneurship to PE?
Hi,
Quick background on my experiences:
- Went to a target and did a finance degree
- Did a couple of internships at a BB in IBD
- Graduated and opened a independent school
- That school is now growing and doing well ... still fairly early in
I really enjoy finance and transactional work rather than the operational (and headteacher) side of things my current role requires of me. I wouldn't look to sell my business and instead find a means to stand-aside and find a replacement. I've always enjoyed finance and would love to transition back in. I think I'd really enjoy private equity/venture capital as my business starts to level of in a few years.
As it stands, I see two options (although unsure on the 2nd options feasibility):
-
Open/acquire additional schools (this is very time consuming and they are very slow growth)
-
Enter private equity/venture capital (unsure on how to likely this is)
I'm still sub-30 and an executive MBA could be an option too if the networking can help. I'm also unsure what level I would/could join in PE/VC as I appreciate it's unlikely I bring much relevant experience.
I know this is an unusual situation but advise on my future prospects with PE/VC would be very helpful.
Did you raise any capital for the school? If so, what type of capital?
No external capital used - it has all been started with personal funds.
I am in the process of raising a few million to build student accommodation, but that's a one-off.
Why not turn it into a platform?
1. Pitch a few PE firms on the idea.
2. Lock down a target co larger than you.
3. Buy it.
4. Scale.
Sounds like you should do a buy and build - look into what KKR did with Cognita etc.
if you need some capital happy to chat privately I have very flexible capital for these situations.
@M_1 & @Pan European Monkey
I would definitely be interested in that as I have a good foundation on my current school. We are academically very strong and I'm developing an educational consultancy (university application consulting) and it would both add value and be easier (comparative to my current school) to share/bolt on to follow-up schools. Plus there are a number of cities/countries where there would be demand for a similar school.
The reason I thought it'd be useful to do PE is I feel purchasing a company/school is such a significant part of the model and I have no real working knowledge of how to do this. I guess teaming up with a PE company is a possibility but I would be reliant on them for a large part of the model. However, reflecting on your comments has helped me realise I should properly focus on my area of strength (operating and growing the school) rather than dropping that to add on an additional skill-set. Years away doing PE would detract from me being able to compound the school's value.
A follow-up question would be do you feel through joint-ventures, MBA's (potentially) and learning from others, I could develop that same skills (to a lesser but satisfactory extent) a PE banker would have. Maybe partner for the first few, and then you'll learn the ropes. Or is doing PE very specialised. Partnering for the first one seems sensible anyway as I'd be constrained from a capital point of view.
I would think that any capital provider would help you navigate the buy and build process, partnering with a lender would have the least dilution to you but would bring less operational, a PE fund would bring significant operating experience but would likely require a majority stake implying lower economics to you & a more stringent governance. And then you have some hybrid funds that would be somewhat in the middle. Having some PE experience would probably allow you to run the process alone with some debt providers but it would take you a good 2 years to get up to speed in PE and not sure why they would want to hire you & let you keep your business on the side.
Alternatively you could try to sell your school to a platform backed with significant capital to go out and help them buy other schools.
As said happy to discuss privately - don’t want to reveal too much about how I could help publicly but this seems like the kind of stuff we really like and would be happy to help on.
Delete
Hi all - thought I'd add an update after a yr. School is growing, reputation is strengthening and my job role in itself shifts year-on-year to become more strategy and less operational. I do enjoy it and it feels somewhat like a child, so i'd like to ensure its success. It's essentially the outcome of my 20's.
Money aside, I think my view is that the school should continue to scale as that will vary my work and keep things stressful and fun. Growth in one school will eventually flat line but there is definitely a second location I'd be interested in within the next 3-4y.
Still have the wish to try a different industry/go B-school for fun. I just want variety I think and exposure to people - the school can be quite isolating. Would love to be involved in PE in some format but unsure how this would work. Maybe specialising in schools but it doesn't seem a big niche. I think seeing lots of businesses grow through the shorter-term lens of PE is fun.
I think there is limited scope in trying to just scale and acquire lots of schools. There really isn't much in terms of synergy that's possible and it's very hard to deliver a uniform(ish) product at scale. Being involved in a variety of education-based PE projects seems less niche and more interesting. I just can't see where my value-add could possibly be.
If you really want something else, I'd say look into an MBA, and I think with your story and background you could get into top MBAs easily. And then from there, break into VC/PE or whatever you would like.
However, if the school is going well, I don't see why you need to change what you're doing?
How much are you cash flowing from the school? Why not form an independent investing biz on the side with the cash flows to invest in education startups/companies where you can bring operational value-add as a board member or advisor?
The PE skillset is definitely valuable but not something so complex you couldn’t learn enough to be dangerous - assuming you are a pretty self-motivated based on your background. Maybe take a few modeling courses or maybe even exec MBA course on it. Cultivate a network of a couple of PE guys and ask them how the sausage is made. The real value in being a great private investor lies in the ability to spot trends and having operational conviction to recognize a good business, as well as credibility to build a network in target industries. You have these in spades in your niche. Riches are in the niches, my friend. You are already sitting on one, so time to start mining it. Think bigger than just running the day to day of your own business - go network with entrepreneurs and investors in your space to see where you fit in. You have a tremendous sourcing edge compared to your typical generalist PE type/bankers.
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