I am very new to the entrepreneurship through acquisition game and I want to learn more about partnering with a PE group on a business acquisition. I don’t have much money starting out so i wanted to partner with a strategic group to provide some equity and some guidance. Is this a common path people take? And what’s it like partnering with a private equity group when buying a business. Any feedback helps. Thanks!
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Even if you operate the business I’d expect you would get <10% of the upside. Remember that the PE group typically takes 20% of the upside in a deal. In a standard PE deal, 10% of the equity is reserved for management options, which you would be eligible for if you have the right experience. If you go to a traditional PE group and ask for 70% of the upside like some get in self-funded search deals they will likely dismiss you.
Depending on the size of the deal you want to do you should connect with traditional search fund or self-funded search investors. There are lists available online with some digging. They understand the model and will be more searcher friendly than PE.