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Looked into it myself. If you have the right background (prestigous-ish banking, solid PE) would be very doable.
I'm doing MBA first and maybe concurrently, but I think it'd be do nice to do pre-MBA, as MBA could be a reset if you need it (will make for a hell of a story).
Agree with the hell of a story part.
Haven't done the IB to PE circuit but have spent time in Asset Management and a few operator stints at startups. Have a hard time stomaching both the money and time for b-school just to win over some LP's approval on optics. Personally think operating experience is even more valuable than banking here from the research that i've done but curious to hear if others on here have made it happen without an MBA and what kind of profiles they had.
I helped two different friends get it done without an MBA, but they used capital sources that came to them through people in the b-school search fund mafia who were okay sharing.
Agree with you that being an operator makes a ton of sense, more so than a cookie-cutter MBA searcher with finance experience. Unfortunately, as in so many other areas of life, optics do matter. For a searcher, the only benefit of the MBA happens to also be the hugest benefit possible: it gives you guaranteed funding. You may not love the terms (they correlate really well with the quality of the deal), but they'll be there.
If you are willing to do an unfunded search (you support your own expenses while searching for the asset to buy), you can get by without the degree. If the business is compelling enough, you can cold-email your way through most of the search LPs (the institutional ones all do a good enough job of making themselves discoverable on Google). They'll all take the call, it's a pure numbers game for them.
Awesome, thanks for that!
No MBA or degree but have a very strong operating background and have acquired companies as more of an independent sponsor.
Unless EBITDA is over like...$3m - $5m then PE/IB skills are relatively useless. Better than nothing but they don't really translate.
Depends on the IRR you want too I suppose but I don't recommend entrepreneurship unless you are aiming to be filthy rich. It's not worth the stress otherwise. Don't do any deal unless there's a clear path to you netting out over $1m a year within 2 or 3 years. Anything less and the risk/reward/stress logic doesn't crunch IMO.
No MBA or degree but a strong operating background? Would absolutely love to hear more about that operating background and how you went about acquisitions as an indendepent sponsor.
Any colour on your acquiring and exit prices? Curious what kind of IRR and growth you were able to hack (+industry, size, asset light or heavy, etc, etc)
Sorry for being a pest, collecting as much info as a i can
I second this motion, please share your precious knowledge my lord.
I did an AMA last year. I focus on distressed eCommerce and DNVBs + early stage DNVBs now.
https://www.wallstreetoasis.com/forums/bootstrapped-entrepreneur-nettin…
One thing I didn't already share is how easy the SBA lending process is. If (a) you have a decent credit profile personally / (b) you're willing to go through a slog of a 12-20 week underwriting process, you can get 90% LTV from an SBA lender for business acquisitions up to $25m through the 7(a) program.
Different banks will have different lending limits (dollar scale). Some will use the 504 program and size up.
There are also non-bank SBA "designates", and those guys can move faster (7-14 days) and do sizes up to $100m. They went through the hassle of getting approved by the SBA to do the underwriting while still accessing SBA monies for the loan.
In plain English, if you want to buy a business for $5m and can find someone to give you $500k, then you're good-to-go. Paper an LOI with the seller with a long closing period (if not naming the day count, then a clause that names the duration "subject to closing of debt financing"), then go to work on the SBA portion.
$500k doesn't require an MBA network. You can get that done in a Chamber of Commerce or Rotary Club, old bosses, an alumni network, or friends of relatives if you come from an affluent enough background.
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