Starting an independent sponsor with 5 years of experience
Honestly just looking for advice. Have done about 500mm in middle market sell sides as an analyst and about 150mm in buy side deals through addons refis and new platforms. Candidly my firm is just so ass backwards and although I make good money and have a good trajectory and a decent lifestyle, but I don’t want to keep working here for the long term and honestly have an entrepreneurial bug and I have a game plan for how I would go about it. I am currently working and detailing it out in greater detail but the thought would be sourcing for a deal about 40-50mm of EV (assets with less than 10mm of ebitda) so prob 20-30mm of equity give or take 5mm or so. Guys that have done this at a similar point in their career to me typically do business school and then do the search fund/eta/independent sponsor model, but would generally note there are a lot of folks especially in the independent sponsor category that were principals or higher for a long time before branching off.
Do I need to go to b school if I am a sr associate? Or can I just start doing this if I have a plan and can afford 12 months of no income?
thanks in advance would also love to meet anyone that wants to dm and chat on this in greater detail outside the forum.
Who is going to give you the capital? I've never seen an IS that only had a few years of banking + 2 of PE successfully execute a $40m-50m raise unless their dad's already rich and fronting the lion's share and bringing in more senior talent to co-run the process. This environment seems particularly unfriendly to a less experienced professional trying to raise money, even if you're sourcing from family offices/UHNW.
The only time institutional capital will back IS is if they're pedigree is rock solid. The OP's is not this (at this time); they want a good PE name where you lead deals and even then the bar is high.
FFF (friends, family, fools - haha kidding, but the phrase always made me laugh).
I mean it’s the golden question. I can probably self fund $500K of equity. Then the rest I will largely be relying on contacts of contacts / friends and family / wealthy families that I know of. I would also look at capital groups that specifically fund search fund models or some of the PE firms that have recently launched strategies in the space (shore, and align are bigger brand names that have independent sponsor strategies - full disclosure know absolutely no one there but there are other capital groups that focus on this space), also there are some SBIC funds that provide both debt and equity out there. Candidly it is definitely something where the odds would be stacked against me. In parallel I would build a network of operating advisors with more experience to work alongside me (in a perfect world). I would still have to line this up; I can think of at least 20 names and only know that one will confidently work alongside me and would put their name on the website with mine.
Try a simple exercise of marketing yourself for a step up role (Sr. Assoc/VP?) to a larger PE fund in this brutal market. If you succeed in that.. you will have a slightly better resume for raising a fund in future. If you fail in this simple exercise, how are you planning to convince LPs to give you their capital?
It is a really tough business. More independent sponsors than ever at the mcguire woods conference this year and fewer deals. Not worth it...
Happy to talk about this
Is the mountain just as steep in this scenario:
Is that interesting to investors?
Yes, pm me. Might be able to help support this
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