Can anyone detail the fundamental differences between single sponsor searches (e.g. SFA) and CIT/CXO programs (e.g. Alpine). On a surface level -- they seem very similar. You work with a single sponsor, you have a cohort and access to institutional resources, and typically take over as CEO post-acquisition. From the operators/entreprenuers perspective is the difference just in marketing? Or are there some fundamental difference in either program or economics?
What are differences between single-sponsor searches and CIT/CXO programs?
by a searcher from Harvard University - Harvard Business School
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CITs are not guaranteed to step in as a CEO right away -- in fact in most cases they will work under a more experienced CEO-in-Residence that Alpine has put in. There certainly is an opportunity to advance quickly, and depending on the investment cycle, you could have a shot at a CEO role in a few years; also, some CITs do become CEOs at smaller companies right off the bat.
As far as economics go, it's a bit of a trade-off between guaranteed great comp with Alpine and more variability with a much higher upside in a search. You'll make a great post MBA salary and bonus with Alpine, and you'll get some equity on top of that -- but you won't own anywhere close to 25% of the company. In a search you'll certainly have lower cash comp during the search period. Depending on the size of the company you buy, it may be able to support an Alpine-level salary & bonus. And, of course, a 25% equity stake will be a huge part of your ultimate compensation. With a search, I would say your personal performance will have a much bigger impact on your ultimate financial outcome.
Both models can be great for different people, but they are very different. With Alpine you get to be a part of a well-funded, well-oiled investment machine (with great people btw) and you are likely to end up in a great company that has a lot of potential to grow. In my opinion, it could be a great place to get operating experience before doing a search. However, if you really want to have control of your own outcome, and truly feel like a business owner, you're only likely to get that with a search.