What do all of you guys think would have a higher chance of success for someone with a few years of M&A investment banking and a few years of PE experience and a serious entrepreneurial itch? For some quick background, I have some family friends and contacts who are very interested in pooling together some private capital and doing some deals. One particular family recently had their business recapped by a sponsor at a $1B+ valuation.
Raising $20mm, finding a platform and attempting an industry rollup where I would be an investor (albeit a small one) and also be entitled to a big chunk of the management incentive option pool
Pros: would be able to focus all time and energy into growing 1 single business. Could work to quickly learn the ins and outs of a particular industry and start gaining deep knowledge in that niche
Cons: concentrated bet on a single business. All eggs in one basket, no diversification, etc.
Raising a slightly higher amount (call it $20 - $30mm) and doing 2 or 3 deals in a more traditional GP/LP setup with 20% carry
Cons: would need to spread time and energy across multiple companies. Likely would take longer to deploy the capital. Likely significantly more upfront legal work to take this route
Interested to hear people's take on this and hear some different viewpoints.