How To Leverage Independent Deal Experience As An Undergrad
The title gives a TLDR of what I'm asking, but I'll give a longer explanation here.
I'm an undergrad at a state university (most would consider it a semi-target but the university is large and there are a lot of alumni in the metro area so there's actually decent networking to be done in the local area). Over the last few years, I've been working on deals independently, primarily with independent sponsors and self-funded searchers (a variation of the traditional search fund model) on LMM deals that normally range from 1.5mm EBITDA to 4mm EBITDA; basically non-sponsored deals from those doing deals on a deal by deal basis.
I would help these IS and searchers with the post-LOI process (raise capital from an LP network I developed, operational due diligence, financial due diligence, developed PPMs with investors, analyze QofE, etc.) Basically, I would act as their M&A monkey, and in turn, they would give me a piece of their economics, if and only if, a deal closed successfully; most wanted to keep management fees and carry to themselves so I really only got a piece of the deal fee if I helped them. At first, this seemed great; if you're an undergrad and just made a 100k deal fee it seems great but after doing this for around 2 years now I learned that I don't want to continue to do this.
The issue with this model is that deal flow can dry up at any time and you only get paid on a success basis. I had this happen last year when a deal fell through after working on it for a couple of months from the IOI stage to pretty deep into the post-LOI stage, and it was no fault of anyone on my side. Essentially there's alot of uncertainty with this kind of model and I prefer to work in a model that has recurring income rather than sporadic deal fees. There are also no opportunities that this leads to other than you doing your own deals as a small independent sponsor.
For this reason, I'd like to start networking with local LMM PE firms for an internship and FT position after graduation. I'm expecting graduation after finishing the fall of 2025 semester.
My main value add when working with a local LMM PE fund would be that I've already worked on deals their size so I'm not coming in without any experience. Also, throughout my time working with a lot of IS and searchers, I developed connections with mezzanine funds, SBICs, BDCs, etc. whom we've run lots of deals through, and also a large network of brokers who are willing to provide pocket listings that other buyers don't have access to. I'd be willing to provide this deal flow and debt financing connections to any firm I'm working with.
With all this said, how exactly do I articulate this when I'm networking with funds? Most people don't expect an undergrad to have much deal experience so this is an edge for me but I don't know the best way to go about letting others know about what I'm able to bring to the table.
I envision that the easiest thing would be to get on an introductory call with VPs or MDs and present some of the deals I worked on and let them have access to a data room of a previous deal I've worked on along with my role in it. And similarly, I could sign an NDA and get an overview of some of the past deals they've had on their side (both deals they've passed on and those that became portfolio companies). From there there's likely to be some overlap and it's a rapport builder; some percentage of those could turn into potential internships.
Any thoughts on this would be helpful!
Based on the most helpful WSO content, here's how you can effectively leverage your independent deal experience when networking with local LMM PE firms:
Craft a Compelling Narrative: Start by developing a clear and concise narrative that highlights your unique experience with independent sponsors and searchers. Emphasize your hands-on involvement in the post-LOI process, your role in raising capital, conducting due diligence, and developing PPMs. This narrative should underline the skills you've acquired, the responsibilities you've managed, and the economic benefits you've generated from successful deals.
Prepare a Deal Portfolio: Assemble a portfolio or a data room that showcases the deals you've worked on. Include details such as the deal size, your specific role, the outcome, and any key learnings or successes. This portfolio will serve as tangible proof of your experience and capabilities.
Highlight Your Network and Access to Deals: Clearly articulate the value of your network, including your connections with mezzanine funds, SBICs, BDCs, and brokers. Explain how these relationships have facilitated deal flow and could be beneficial to the PE firm. Demonstrating your ability to bring exclusive deals and financing options can set you apart from other candidates.
Initiate Targeted Networking: Identify key individuals in local LMM PE firms, such as VPs and MDs. Reach out for informational interviews or introductory calls. Use these opportunities to present your deal portfolio and discuss your experience and network. Tailor your communication to address how your skills and connections can meet the specific needs or gaps within their firm.
Leverage Alumni and Local Networks: Utilize your university’s alumni network to connect with professionals in the PE industry. Attend local finance or investment events to expand your professional network and increase your visibility among potential employers.
Propose Mutual Value Exchange: During discussions, propose a mutual exchange of value. Offer insights from your deal portfolio and express willingness to share your network contacts. In return, seek feedback on past deals and inquire about the firm’s investment strategy and portfolio. This approach not only builds rapport but also demonstrates your proactive attitude and commitment to contributing to the firm’s success.
Prepare for In-depth Discussions: Be ready to discuss specific deals in detail, including challenges faced and how you overcame them. This will demonstrate your problem-solving skills and your ability to handle complex situations, which are crucial in the PE industry.
Follow Up and Stay Engaged: After initial meetings, keep in touch with the professionals you’ve connected with. Share updates about new deals or market insights that might be of interest to them. This helps to keep the relationship active and shows your ongoing commitment to the field.
By following these steps, you can effectively communicate your unique value proposition to potential employers in the LMM PE space, leveraging your unusual but impressive background to secure opportunities in the industry.
Sources: Q&A - Starting Post-MBA Megafund PE, LMM PE Associate Experience - What is it REALLY like?, Q&A: 3rd Year PE Associate ($10bn+ AUM, MBO/LBO, equity, mezz, distressed debt), https://www.wallstreetoasis.com/forums/qa-hf-out-of-undergrad?customgpt=1, Why is WSO anti-buyside out of undergrad?
Bump
Fascinating read! Where did you learn how to do all the M&A work, like operational due diligence, LP and debt fundraising etc. Do you have any book recommendations?
Also where did you find the independent sponsor, and search funds to work with?
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