Thesis-driven searches are compelling (“here is what I’m going to build!”). As is specialized sponsors with deep vertical niche expertise (“I will continue to do what I know best!”).
However, be prepared to pivot if your thesis doesn’t play out as expected.
Example 1: I recently chatted with a searcher who had spent a year on a sound, industry-focused roll-up plan, but eventually acknowledged that it wasn’t possible to execute. So the searcher developed a new thesis - similar in structure but different space - and is now pursuing that instead.
Example 2: A few years ago I started Picket Fence Partners, a vehicle meant to roll up property management companies. I liked the space; recession-proof, mission-critical, sticky revenue, scalable, and more. I actually still like the space. However, I gave it up after six months because of what I learned from talking to ~100 business owners: most property management companies are too small (<<$500k EBITDA) and most of the owners are also realtors (really aggressive negotiators).
