Evaluating lower-middle market PE opportunity

"There's no reason to be the richest man in the cemetery. You can't do business from there." - Colonel Sanders

F. Ro Jo

Neanderthal

Firms track record Founders track record Who are LPs NAV of current portfolio Headcount Next fund target size

intrinsic_value

Orangutan

I'd also enquire as to their transaction sourcing model: ie a cold calling or otherwise.

Authored by: Certified Private Equity Professional - Executive DirectorCertified Private Equity Pro

Capitol86

Gorilla

Avg equity check per deal and # of deals per year (how long until they raise the next fund)
Age of investments (are most investments pretty young and not likely to be sold soon?)
Any other hirings/firings/departures from the fund (turnover or other turmoil at the fund)

Authored by: Certified Private Equity Professional - PrincipalCertified Private Equity Pro

spyvspyder

Senior Orangutan

Current fundraising efforts. If they are ~80% deployed, they should be actively raising capital for their next fund. If they are not fundraising, it would signal that they haven't liquidated enough investments or the fund returns aren't good enough to raise another fund.

Authored by: Certified Private Equity Professional - PartnerCertified Private Equity Pro

mrharveyspecter

Human

Best Response

Ask mentioned above, the important things I'd look at are

LPs Sourcing Founder Background and Track Record

In Addition I'd ask about

Fund/Investment Thesis - Make sure this is tight. I've found that good funds have strategies and know what they look for and how they're going to impact a business.

Vision for fund - Why did the founders leave their former (and presumably PE) jobs and what is their goal for the fund. Getting to be a Partner at a large PE fund is a pretty great place to be, so why did these guys leave.

Opportunity for your growth - This fund seems pretty small, so regardless of what level you're coming in at, you're going to have a lot of responsibility. What is your role going to be and what is their hope for you moving forward?

Authored by: Certified Private Equity Professional - Vice PresidentCertified Private Equity Pro

TippyTop11

Almost Human

With a small firm size, are you likely to get a % of the carry- as an Analyst? Think 4-5 total people

26 Broadway where's your sense of humor?

biggsy

Senior Orangutan

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