So I’ve recently been reaching out to PE firms in the deal size range of 5mm-20mm. I have a bit of an atypical background (no transaction/ deal experience), but have done strategy, HF & consulting roles (albeit t4 consulting). As one can imagine my atypical background hasnt the intended transition to PE easy.
Whilst I’m very early in the process, from what I’ve been told by PE WSOrs as well what I’ve been getting in my recent networking chats has been “if you want someone or us to hire you, the best way is to bring us a deal” - or some variations of this.
What does this mean? Proprietary deal flow? If I were to find my own deal wouldn’t I just be better off going as an independent sponsor?
Secondly, how would one go about doing this? Where would you even start as a non-PE professional?
Any thoughts are appreciated
I think what they are essentially saying is that you are not even a candidate before you can show that you can pull some weight yourself. Your atypical background and lack of deal experience is a deal breaker for a lot of PE-shops. The smaller the shop - the higher the requirement to bring in own deals is.
Going as an independent would be financially better, for that deal, however I would think that having a firm behind you would bring in substantially more traffic in the long run, especially given your background.
Try to set up some meetings with a PM from the firm you are looking to get hired for and some old clients that might sell their shop but have yet to engage a financial adviser.
I guess my question is this.. suppose hypothetically I could introduce businesses within their fund criteria through family friends or connections otherwise and then set up a meeting to talk with said fund.
At what point am I delivering value and marketable - do I have to bring a couple of those in? Does this deal actually have to close and then I’m hireable?
I’m looking into this whole idea of prop deal flow and finding a biz in 3M-10M EBITDA range that would be suitable. Seems like every fund would hire me if I were to find this said business - but it seems impossible to even accomplish this?
Well first of all, who the fuck would write you a check if you were an IS when you can't even get hired at a PE firm? Not trying to be a dick but that logic flow makes no sense.
My sweet spot is around that range and we don't hire unless someone has PE or heavy ops experience either. It's just too easy to hire someone with a solid track record.
With that said, don't give up. Make it clear you'll work for less than what people expect to pay you and maybe you'll get picked up.
As far as hustling deals go, it's 100% doable. Smile and dial, join (real) networking groups etc...
If you're eligible for EO/YPO join those and cough up the $.
Look I plead ignorance re the IS model and the the industry as a whole. I’m very early on in the process with this being the first PE fund I’ve reached out to and agreed to meet me.
I would like to think that these guys are meeting me for a reason, I don’t have transactional experience, but I do have HF/operational exp/ good grades & target school. I’m looking at an entry level analyst roles in PE so it’s probably not all farfetched given my profile.
Could you expand on the deal sourcing bit about cold calling? Do you have any other insights / advice? Ive done the obvious and reached out to family, friends, professors and previous workmates but I am interested in giving it a shot.
Thanks
not going to happen sorry dude
Can you expand on your operational experience?
Why don’t you just move to tech banking and then PE? I know I’m making that sound simple but your profile would be an easy hire at a tech banking shop and having some deal experience would open up a lot more pe opportunities than currently especially if you come from a target
PE is a transactional business where deals are integral to the investment process. Not having deal experience puts you at a massive disadvantage.
I’m actually a little confused as to why you want to move to PE or how you can even have confidence that it is something you would enjoy if you haven’t been part of a deal yet? I don’t work in PE but if I was a PE hiring manager this would be a huge red flag for me.
Thanks for the suggestions.
If its any constellation the type of shops I'm gunning for generally look like they are more operationally focused and operate on the ultra lower end of the market (check sizes 5m-20m / 3m-10m EBITDA). From the PE professionals I've spoken to that operate in this space they generally can't take on debt/LBO, so returns are via EBITDA growth which is spurred by "rolling sleeves up" and agitating growth. E.G evaluating/hiring management, market dynamics, GTM strategy, making introductions / strategic partnerships etc etc. Very similar work to my consulting and prior strat/biz dev operational roles.
I've been purposeful to target these types of shops as opposed to say MM/ maybe even some LMM shops. I 100% know I wont be able to compete against any run of the mill IB / consulting candidate (even big 4 / CF) with more deal experience than me. I suppose the angle I'm taking here is, look, I dont have deal experience but I do have experience working alongside c-suite in a decent sized organization to agitate results and secondly, I do have the hard / technical skills through prior experience working at a hedge fund.
Again, I plead ignorance because you're right, I haven't worked a day in the deal process besides some due diligence I did for a PE fund (site visits, interviewing customer, employees / management). I do however think that that I might enjoy being a PE analyst because a) I have a background in LO hedge fund space / love the high level nature of investing and b) Have opp / consulting exp (albeit a shitty consulting firm) & enjoy seeing tangible value being added to organizations by initiatives / analysis I recommend.
So then why not go to banking and get the deal experience? If you're fine with the lowest of the lower market funds then your opportunity set will be the same now vs 1 year from now at the worst and bigger at the best case scenario
You're correct there. I operate in that size range and maybe get 2x to 3x ebitda in leverage at most. Definitely more of an ops/growth type play VS financial engineering. I think you could squeeze in somewhere for a PE firm as a drop in operator/hands on consultant but the problem is that a lot of those roles are kind of a who you know type of deal.
double post
Hey buddy,
You might not need to "find a deal", perhaps just building a pipeline and having a few solid leads could be enough to get you a spot on the team. I'd target a specific industry, make a 1-2page website call it whateverthefuck capital, get some fiverr guy to scrub as many companies as possible and jsut start emailing them sayign you are looking to acquire companies from entrepreneurs looking to retire. Send out 300 and you should prob get about 10 leads. Show them your pipeline and they will prob consider trying you out.
Thanks for this, solid advice.
Hey OP, It took me about 3 minutes to realize I was never getting in the front door of a PE shop. They're too elitist, insular and all that. And I got a few of those Bring us a deal responses. So I did. I targeted my very specific niche (see my name) and when I had a deal I went shopping for a partner, but now I was the buyer. When you have a deal, you have the power and you get to pick who you work with. And its probably not the twits who dismissed you with the Bring me a deal line. I picked the right partner. But getting started means wandering into the jungle and killing something. It's totally guerrilla fighting if you really want to get a deal done from scratch, but that's how you break into PE when they don't want you.
awesome quote
Hmm, this is some kind of "entrepreneurship through acquisition(s)" / "search fund" story or what ? Sounds very interesting and I think it was a difficult task to accomplish - kudos to you. BTW you are from the USA, right ? At the end you got a job at PE fund or put the money on table and successfully acquired (distressed) company?
Currently interning at a business broker firm/m&a advisory firm where we look at companies in that range, PM me about finding leads.
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