Going to quit my job and team up with a friend and buy a business next year (1-2M in ebitda size). We each have 300k to put towards this and have 1M in soft commits from potential investors. Would finance the rest from SBA. We’d honestly probably make less compensation from the first few years but I think it would be exciting and challenging.

Has anyone else considered this? If so, what impacted your decision and do you have any regrets? I’m single and 27 for context.

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A good friend did this exact same thing about 20 years ago. They took it slow, hired few but the best, and about three years ago were bought out and he’s retired at 55. The downside was he gave the business everything, missed family time, and worked vacations. His marriage teetered. Proceed with your eyes wide open.

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That’s rough.

The way I see it I already work insane hours in my job and would rather work insane hours for myself and build equity in an asset I own. If I can sell it in 5-7 years I’ll be around 33 with hopefully 2-3M in cash from something I built and exited.

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Hope you will crush it.

likehelpful

Youre an IB guy, hopefully MM or LMM so you know what you’re getting into.

I have a lot of former colleagues and people in my network that have attempted this. Some that go 3-4 years without ever actually acquiring anything.

My only hesitation for you is that there are 1000+ search funds out there, plus LMM private equity/family offices so competition is fierce from better capitalized groups than yourself, not to mention strategics/trade buyers.

While there’s definitely an abundance of opportunities but at 1-2M EBITDA, the businesses are extremely scrappy, typically a lot of key man risk with entrepreneur, and rolling up your sleeves is an understatement to 2x your money even over a 5 year period.

That being said, it’s definitely possible and wish you the best of luck! You got bigger cahonas than I as I’ve thought about it many times over the years but never did.

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Yah for sure. DM away.

FWIW, I’m just more risk averse given stage of life.

While there are definitely benefits to processes, PE/institutional capital typically dislike them compared to direct approaches because processes are geared towards strategic or sponsor-backed companies (pay more because of synergies, non-financial decision, etc.). Not 100% of the time, but commonly they end up paying more than they need to to win a deal or they’re buying a dogshit business that all strategics have passed on.

I bring this up because every capital sponsor is looking that direct approach opportunity that givens 20% IRR at valuations that roughly approximate “notional value”, aka not overpaying.

Also the number of these LMM “private equity”/search funds has more than quadrupled since 2020 so what was already a fragmented market just became even more so. Especially the search fund space where capital is “promised” but not actually committed/given.

What's the business and how are you sure you will get 1-2M ebitda?

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We’ll buy something underutilized and scalable that is already doing 1-2M in ebitda historically. There are hundreds of them. I do lower middle market M&A and see them every day.

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Think it’s a great idea. Know a guy who did it and he doesn’t regret one bit.

Good luck! I left PE recently to support search funders like you. Feel free to DM.

smart

Hope it's not the horse and buggy business 😬

I have heard of a few people attempting this, would be hard but doable. I see some business owners who are very disorganized and am amazed they can run their own company. For someone with financial acumen like yourself, you have a good chance of succeeding

I always thought a roll up strategy for paving, HVAC service, heavy equipment, etc. would be interesting

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