Independent Sponsor opportunity, need advice
I’ve got a potential opportunity with an independent sponsor. The team is currently 5 people, but deal flow is strong and raising capital on a deal-by-deal basis hasn’t been an issue. They’re executing 6–7+ deals a year, and I’d also have the chance to work directly with a very reputable, successful individual who could provide great mentorship. From everything I can tell, the platform seems like it’ll be robust for the foreseeable future.
I just started in consulting a few months ago. I’ll be here at least a year or 2. It’s been a good experience so far. Comp isn’t amazing, but I’m getting valuable exposure to clients, interesting industries, and a solid amount of PE cases.
My main question: if I were to join the sponsor after 1 or 2 years in consulting, is that too early in my career to make a move to such a small platform? Would you take that opportunity, or try to recruit into a larger, more established shop first? And for evaluating the sponsor itself, what are the key things I’d need to know to make an informed decision?
Curious to hear any perspectives. Happy to elaborate more if helpful.
what is comp?
Unclear right now. What do u think would make sense for comp
Do you have a good reason for wanting to go to a larger firm besides money, prestige, etc.? LMM PE / IS can be a great spot with less hierarchy, more responsibility earlier in your career, less rigid promotion schedules and significant earnings potential (likely more in the form of carry vs. cash given management fee base). Of course, there are horror stories here too, but getting carry payouts on a deal-by-deal basis is very underrated by younger folks on this site.
If the team is as good as you say and they are doing that many deals as a IS (seems surprising given how much effort it takes to raise the capital but maybe they have a subset of LP's that make this easy), it seems like a good learning opportunity. If it doesn't work out, you should have the skillset to do other IS, LMM PE, consulting, banking, etc.
The only reason I’d consider going to a bigger firm is concern about pigeonholing myself too early. I’ve heard it’s generally easier to move from a bigger firm to a smaller one than the other way around. If the IS doesn’t do well in the future, I’d want to make sure I still have an out. The team is led by two heavy hitters with a great LP network and it sounds like deal capital/dealflow isn't an issue.
If the IS firm mentioned has no desire to raise a fund and you want to do PE, it's a great place to start. I'd argue these firms are much better investors as they literally only care about carry versus raising funds to rain in management fees. Carry is also way faster to turn around given it's deal by deal.
Some things to think about:
I've been studying modeling in my spare time and am getting comfortable with the PE process. It seems like I will have an opportunity to join when they expand the team.
Bump
Doesn’t even sound like you have an opportunity to join
So difficult to say without seeing the deals and team profiles.
Where do they get their capital from?
Have the existing companies done well?
What is your comp? Would they let you originate a deal?
As other said, we'd need more detail on the firm set up, ticket sizes and what exactly your role would be. Some quick thoughts:
1.) Don't assume that they'll take you next year/ year after. We're talking about a ~15+ deal fund by then. At that stage you'll need proper PE folks, unless you are being hired for complete menial junior stuff.
2.) 5 folks doing 7 deals a year + raising for each deal + boards + usual admin + sourcing + hiring is a proper TOUGH ask.
Are we talking roll-ups or small companies or something?
You need to know what exactly they want you to do (split of fundraising / investment / portco streams).
It's not hard for me to see how this can potentially be a sweatshop with that staffing BTW. You need to get a very good download for the set up & modus operandi.
3.) No doubt that places like these have the potential for 10x-ing learnings vs. consulting.
4.) Carry can be silly with deal-by-deal. Being in early also makes all the difference. 2 years from now you'll join a fund where you'll have no carry but maybe you are having to nurse shitcos / fix them for no return. I've seen good people getting burned like this. The more junior you are the less choice you have to pick your work.. obviously.
5.) IMO the first couple of years of experience is hyper important. For the first 10 years of your professional life you'll be getting a huge lift for being perceived as the "McK guy" or whatever it may be. If you are with MBB, you need to probably stay and not take any risks for now.
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