Anyone ever hear of a PE associate starting a search fund after a few years in PE, without getting an MBA?
Still interested in people who did get their MBA after.
My boss was telling me that it would be difficult for a PE guy to start a search fund because he would lack proper management experience, and only have the deal experience to acquire the company.
Any input would be appreciated.
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Wanted to also ask:
If I'm interested in starting a search fund down the road, should I go into consulting out of undergrad or PE?
I already have intern experience at a mm PE firm.
It will be difficult to raise search capital at that age without having had any meaningful management experience. Also since most search acquisitions involve some layer of debt, lenders will be hesitant as well. Also could largely depend on how your PE experience goes - if you are more hands on with the portfolio company you could make an argument for that constituting as experience. Long and short of it is that investors backing your search effort need to believe you have the gumption it takes to run a business and while experience on paper certainly helps, being able to sell yourself is paramount.
Thank you for the info.
The thing is MBA grads don't have any real management experience either, right? Does the MBA just make up for that? I mean maybe some worked in consulting after undergrad.
I do want to continue with PE, it's what's exciting to me, but maybe getting management experience is more important if I want to be a searcher.
Most search funds fail because mbas and PE guys are not used to getting their hands dirty. They've never had to jump in the warehouse and motivate a team of warehouse workers to ship out orders and stay late, or figure out how control CPA when jacking up spend from $5000 a day to $25000 a day, etc...
I'm not saying they don't work hard but they just aren't used to dealing with total shitheads that exist outside of management at companies. This is my experience meeting a lot of search fund wantrepreneurs and PE guys that think they want to be entrepreneurs and then hate it. Same experience hiring PE guys for my firm without true entrepreneurial experience. They are smart but they will not get filthy enough and eat true amounts of shit.
I would stay away unless you really love doing shitty ops work. It's unavoidable if the company has ebitda below $2M or $3M.....
Best books / resources for learning ops management? Obviously experience will always trump but wondering if you have any good ops resources ?
A year in consulting on the cost side and you are set...
Doubling down on this question.
Where do you get your data from? The average searchfund returns are 4-6x moic....see the Standford guide.
That's the simplest, honest and on point answer here.
btw m_1 what kind of business are you running?
If you look at the Stanford search fund study, I think the vast majority had MBAs, and in terms of career experience, a lot of those folks were PE - that may have been the largest segment. If you have someone with ops experience, it might be worth trying to partner
I'm seeing a pretty wide variety of backgrounds in the real world - ignoring the GSB study. Seeing a fair share of people entering this space with no banking / MBA at all. I'm more interested in what some of the operators here view as the must reads for learning more about ops.
Bumping this- anyone else hearing about PE guys without an MBA searching and raising capital ?
Other than your resume, a MBA doesn't add any value here.
Care to expand your thoughts a bit?
I do agree with that but investors always get hard when they see H/S/W grads - these networks plug folks into capital networks but i've met too many folks from top b-schools that are nothing more than glorified networkers.
Are you gonna launch a self funded search or go with traditional model?
I'd want to be self-funded, I can afford it.
Issue is I now work in growth equity, so idk if I can go from growth equity to starting a search fund. Not very similar. Unless I aquire a small SaaS comapny lol
When I was in my junior year of undergraduate, a few years back, I briefly interned remotely for an HBS MBA grad who had started a search fund. He's still running that first company he ended up acquiring, it seems to be successful. Feel free to reach out to connect further.
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