MF PE Senior Associate Leaving for Family Business

Hey man. I went through— or rather am going through right now— a very similar experience (at least to whatever extent that such distinctive opportunities by nature can be similar). Feel free to pm if you want to discuss personally. Below are some very unorganized thoughts.

I’m presumably a few years younger than you, but recently moved from a less technical front office finance job, where I was working with big names and throwing around big money, to my tiny industrial manufacturing family business (it was ultimately my decision but I was heavily influenced by external events outside of my control). It’s certainly a deeply personal decision that no one else can make for you, and not one to take lightly, but can be magical if you really lean into it. I don’t have many solid answers to your questions, because again I’m just going through this same thing, but I can at least throw out some perspective, based on an amalgamation of people I’ve talked to, things I’ve read, etc. I’ll mention a fairly big difference maker is what your role would be. If you’re going to be CEO, or at least have a major decision making seat, that will be much more fulfilling (albeit with commensurate responsibility) than just sitting in the finance department. Some thoughts below:

I obviously don’t know your situation at your current role, but I would suggest you continue at the moment with hard work, leaving as gracefully as you can, because you never know when you’ll have come across your coworkers again in the future. That right there could be your ticket back into PE if you realize that’s what you want to do. And if it’s not, it could help down the road if, say, a colleague joins a firm looking to buy MM industrial companies. My point here is that networking is important when getting a job in finance, which you already know, but it’s 10x more important when you’re off doing your own thing. I’m networking more than I ever have right now. Plus if you can successfully run this business, I would imagine you could get some operating partner looks for similar companies owned by PE funds.

I don’t know exactly what the MFPE skill set entails, but I can ensure you that, with that background, you will be able to add value. How much value depends on the current sophistication of the business. Does management already run a tight, optimal ship? Or on the flip side, would you find the rest of your family asking “what’s an EBITDA?”. Ultimately, the need to develop 200 line financial models and intricate analyses diminishes, and will still have its place (probably a simplified version, though) among all the other tasks you’ll be doing. But assuming your background is unique among everyone else, you should offer excellent perspective because, truly, I’ve found most people in business who do not have a finance background simply do not understand finance or investing, which is critical for success. And by the way— you mention slight hesitation because you always dreamed about doing finance/investments. Well guess what, I happen to view my operating role as a finance role. Sure, I do other things outside of finance, but I still consider myself an investor (hey, I’m literally working in a privately owned businesses— isn’t that private equity after all?). Besides, who says you can’t continue to do add-on deals?

I kinda loath the investor vs operator dichotomy; I don’t even know where that came from and I doubt it has any real truth behind it. Operating, like investing, is a skill that can be learned and developed. And as long as you can work with people, you can operate. A big difference is that in your current investing role, you have one job. You might be staffed on a couple different deals, but you know what you need to do and you do it per your VP’s wishes. When operating on your own, it’s not so clear cut. Cause depending on your resources (this may not be super relevant because it appears your company is pretty big), you have a hand in marketing, accounting, HR, etc. You might be the one ordering new toilet paper to restock the bathrooms. You hear people talk about fire drills on a deal where you have to stay up a little past your bed time to get a couple slides ready for IC? In entrepreneurship, you have real fire drills (seriously— one time one of our company buildings a few states away caught on fire, and it was my dad who was up driving there at 3am to deal with the very real ramifications). The people you work with will also be from a different world. I went from working with highly educated, buttoned-up finance professionals to blue collar factory workers and admins with barley high school educations. Now, there’s nothing wrong with those types of people at all, but you must understand that it’s simply not the same as working with your current team. And if you can’t work with these people without bringing up your $20k watch or house in the Hamptons, then you may want to reconsider.

I don’t know if it’s reasonable to 2x-3x the company because I don’t know your company. But one thing I would suggest is taking a close look at the company and trying to define its full potential (in some medium term), then shooting to achieve that.  Otherwise, is a 2x-3x possible? Well, why not? You need to take what’s given to you and just do it, make something out of it. My mantra lately— as naively foolish as this probably is— has been to jut “make it work”. It’s silly, but I come into work every day with a whole slew of crap do deal with. And I just try to make it work. I just do it. Just get it done. It doesn’t always work, but my mindset hasn’t changed. If you want to 2x-3x the company, just make it work. It doesn’t matter that that’s so much easier said than done; just keep working towards it.

Last thing I’ll say is in regards to the family relationship. This is what can make or break this whole operation, and will have to be something you figure out based on your specific scenario (which is further complicated due to other families being involved). Idk what your relationship is with them, but for me, it’s family over everything. You need to have the attitude of family > money, else you could be this close to turning this whole thing into an episode of Succession and cause inseparable breakdowns in relationships. In my situation, I’m working with some immediate family members (siblings). Fortunately, I truly love my siblings and would consider them some of my best friends. But either way, it’s a weird dynamic, sharing an office with those closest with you as well as just regular employees. There are legitimate pros and cons. But ultimately I find myself energized working with them. It is generally nice to always have people I want to eat lunch with, people I can truly trust, people I can send silly memes to in teams chat and joke around with.