THE BEST BRUTALLY HONEST SEARCH ADVICE I EVER RECEIVED
4 years ago this month, I set out to buy a business with a business partner. I was 4 years post MBA and had a few great generalist experiences under my belt. A long-time friend who'd followed the independent sponsor path after a stint in PE sent me some resources and we initially modeled ourselves based on that. One PE investor friend of ours read our initial pitch, and after being visibly uncomfortable for a few minutes, came back with the following observation that rocked my world.
Ok, this all makes sense and seems like it could work... (awkward pause) ... so you're just a bad private equity group? (awkward pause) ... You know... (stutter) you don't have any money, operating history, relevant industry experience, successful past deals, or adult supervision. You've got some operating and management experience, but not a ton. Your deal criteria look identical to what all the lower middle market PE firms and the most reputable independent sponsors are looking for. You guys are smart, but I'm really struggling to figure out what your advantage is with this strategy.
Ouch. It hurt most because he was spot on. So we pivoted hard toward true small business acquisitions, and haven't looked back. The rest of the story-to-date is well-documented on Searchfunder (though I don't think I ever shared this part before), and in a few different podcasts.
If it feels like I just punched you in the stomach right now and you want to think about alternative strategies that might put you in a better competitive position, check out the FAQ on our Searcher page. It's not for everyone, but worth knowing what some possible pivots could look like if you are in the thick of it.
Connect to me here on Searchfunder if you want to chat about your self-funded search or email me at [redacted] You can also check out our self-funded search partner site at cubinvestments.com/searchers/. I appreciate hearing from people doing unique and thoughtful work in ETA. You can also follow me on Twitter [redacted]