Where Would You Want to be a VP Today?
With all things considered (recent growth, recent returns, investment style / thesis, current portfolio, current investment professional count, fund growth trajectory, cash comp, DAW comp, brand / pedigree, WLB, culture, location, etc.)...where are your top 5-10 funds that you'd want to be a VP at in today's environment (yes, it would've been great to be at Thoma or Clearlake 8 years ago)?
People are gonna throw out the Arclines and Parthenons of the world but in reality it would be *very* difficult to turn down an H&F / CD&R type offer. Maybe Francisco or Veritas pips the title but it's gonna be a sweaty-ish culture regardless. Advent might hit the sweet spot.
This stuff is always gonna be kinda volatile because 10 years ago Bain or Carlyle or TPG or Berkshire would have been far and away the leaders here because the spotty-ish performance hadn't shown up as much yet in fundraising results. Heck, two years ago, people who wanted nothing to do with growth or tech were drooling over Insight because of the balance!
Why is Advent the sweet spot out of curiosity?
Curious
I said it "might" be because it's had great returns and elite recent fundraising (it's what, the third-biggest closed flagship right now?), to the point that the "Euro discount" that might have attached to its US professionals / definitely still does apply to working at idk the PAI and BC Partners (and to some extent, Apax and Permira) satellites doesn't really apply to it. It's not as culturally cuddly as Bain or Berkshire but it seems less rough than some of the up-and-coming MM Boston firms. You might be able to pick between Boston and NY, which increases its appeal, and it's generally sweaty but reports are that it's less "cold" than some of the other megafunds.
These are all just my inklings, but some of these factors may or may not be a priority to someone picking a VP spot, as there's a host of others (see my reply to the "ideal spots" question below). But if I were to lobby for Advent, I'd look at all the points I mentioned.
Are H&F / CD&R the ideal spots?
This is a very "young" question. It all depends on what you want culturally and what your appetite for risk is like going forward. Obviously the upside of being at a smaller fund that doubles every raise is going to be potentially higher, but other people want the security of a high DAW for a fund that consistently churns out 2.2x at a MF scale. Others are really going to want to be in a certain sector, do value vs. growth investing or vice versa, be operationally / turnaround focused or not, etc.
For VP level and partner-track positions, it's a bit like asking "is Samantha from B-school or Hailey from Hinge the ideal wife candidate?" Idk what you like, man!
Heard CD&R’s culture is terrible, have multiple friends that did short stints
Bump
Personally would want to be partner-track at a fund that's already established and reputable (have track record / pedigree for the fund to fall back on), growing its fund size (more economics to spread around at the top / more need for seniors in the future), great investment track record (self-explanatory), and an investment strategy that is a bit more focused on the disciplined side than growth (I feel like disciplined/slightly value-oriented investors tend to do better in the long-run / have some more stability).
I guess some names that would fulfill those areas would be H.I.G., One Rock, KPS, Stellex, etc. Big downside of value-oriented funds that get operational is that they tend to be relatively sweaty.
You could pick any PE firm in the world, and you picked… H.I.G
Let that sink in
edit: I guess I understand One Rock and KPS, at least they have some glamor and punch above their weight. But H.I.G… seriously? This is the sweatiest, frattiest, Miami-based middle market roll up strategy.
No hate if you work they’re, you’re optimizing the middle market and making killer returns.. but come on guys you can’t be taking that over CD&R or Blackstone.
Yeah rogue call - I think somewhat counterintuitively culture matters way more when you’re a VP then an ASO. An ASO at HIG is probably thinking “I’ll grind this out for two years and leave”. If you’re a VP, somewhat by definition you’ve chose to lock-in for the long-haul, and there’s no way you survive that journey if WLB isn’t at least somewhat attainable
I think the calculus is a bit different at VP vs Associate. At VP, it's a question of (i) where will the carry dollars be on a 10 year time horizon, (ii) where can I get mentorship and is there a path to promotion (ie this is a lot easier with growing fund sizes / new strategies being launched), and (iii) where can I fit in with the culture. Fwiw, culture at the VP+ level might also be slightly different vs the Associate level (unfortunately) - where at associate, both sides might see it as a 2-3 year transactional relationship.
All that's to say HIG might score more highly in those criteria than they would viewed through the lense of an Associate.
The most heinous part of the post by "analyzinganalyst" isn't that it's remarkably douchey (this kid proudly boasts he left IB for CorpDev because his trust fund made him not care about the bonus) or prestige whore-y, though it is both of those things. It's that it's wrong about what HIG's angle really is.
HIG is many things, including an annoying auction process participant, but it is not some JAMMBO filled with jabronis in Miami (which, I'm not sure why that's a dig, Thoma is in Miami too) chugging Casamigos with one hand, cutting up lines of blow with the other, fat-fingering some Excel model while Bad Bunny plays in the background. The whole point is to be a super-value oriented investor that gets low multiples for out-of-favor businesses, but it's not fucking mindless; there has to be an actual value creation path to justify the investment being worth it, and turning every rock to find that path is what makes good diligence, not "fratty" diligence. (I'll ignore the dissonance between sweaty and fratty).
The hallmark of a vanilla middle-market roll-up strategy is to bid HIGHER (not lower) than you should and then hope to grow into your multiple through some accretive M&A until you exit at the same multipel you went in with. I'm not saying HIG has never done a rollup, but their strategy is not to thoughtlessly buy-and-scale-and-ride-the-wave-until-exit. JAMMBOs that thought they could run an autopilot roll-up playbook forever got hammered (are getting hammered) in the M&A slowdown, but from all accounts HIG has maintained its performance.
Finally, the notion that HIG has any more or less "glamor" than KPS or One Rock is wild. Only those in the industry have even heard of these firms, and the well-grounded among us at the VP level don't really give a shit what brand name is "glamorous" to dilettantes on WSO. Hilarious that One Rock (not dissing it at all, just don't like the celeb-ification of any fund), an "ugly industrials" value fund, gets described as "glamorous" in any context because some commenter has seen negative litquidity memes about HIG but sees that One Rock hit a couple hard caps.
At the end of the day, I don't really care about going toe-to-toe with this washout who couldn't hack it in finance but still feels the need to post on WSO every other day because he grew up in a brand-whore environment that left him at once both comfortable and wildly insecure. I just hope that actual VP candidates don't look at his "advice" with any weight at all. The HIG model may or may not "work" for your career path and cultural preferences (while recognizing their positives, I don't think I could handle the hand-in-every-pocket churn and don't think I would learn as much as in another environment, for example), but it won't be for the surface reasons mentioned.
Huh?
Why was this topic moved to off topic?
because the non-finance professional mods don't bother reading for context
H&F / CD&R / Advent / Thoma Bravo, any of the big funds that haven't sold stakes to outsiders basically and are doing a good job at fundraising
I wonder how much longer these funds will stay the way they are - I assume that at that size going public and just cashing out seems more appealing by the day if you’re a late career professional and want to retire instead of waiting on carry that won’t materialize for another 10 years.
Every PE fund under the sun will have founders wanting to cash out. This is the endgame. Of course you need to have an IPO-able fund, meaning you have built a proper multi-strategy platform. GP stakes buyers likely are ok with PE only asset managers, but then this isn't a full cash out and less desirable for founders/GP equity holders. If your fund is not branching out into dozens of other strategies then less likely they can cash out.
This is the dream, selling your PE fund to outsiders and fucking generations of investment professionals after you by messing up the economics (and potentially your legacy) just to add a few hundreds of millions to a net worth number that has just been there to flatter your ego for a while now. Greed at its purest. Pure boomer-like degeneracy.
BofA
I've always found these types of questions interesting as the discussions are often void of personal preferences that should dramatically impact where an individual chooses to go. The plethora of investment strategies in PE (both within a given organization and the industry as a whole) requires the individual to have some directional sense of what "type" of investor they want to be. I'm under the assumption when someone is asking these types of questions, they have determined they want to be an investor for their career. By extension, you'll need to also want to have a general sense of what "deals" you want to do as an investment professional. Criteria that I would consider are the size of deals (LMM,MM,MF), industry considerations (Generalist, Consumer, Software, "Biz Services" " manufacturing, etc.), value creation approach (typically correlated with the size of deals), creative latitude in securities (pref equity, credit securities, secondaries, etc.), desired level of involvement as a sr. investment professional. These considerations are highly personal and both total compensation and its components can vary drastically. Then, taking it one step further, if the objective is to be a partner, your preference on the example criteria above and its alignment with a firm's strategy will likely have a material impact on your success. Said in another way, are you doing the types of deals you want to do and are good at so that you can be consistently successful as much as possible. Then on top of all that, you have to ask if the cultural and interpersonal aspects of a given firm is a fit for you.
Compensation is typically a meaningful part of these questions. Long-term, do you want more certainty of cash comp (base+bonus) vs taking more volatility by having more carried interest instead of cash comp. There is an important risk tolerance consideration when it comes to sr. investment professional comp.
I've personally decided that LMM Buyout PE is where I'm genuinely happiest and successful (for now...). From a deal-level perspective, I get to pursue deals in all sorts of niche sub-sectors of broad industries that have fewer participants because they are too small for MM or larger firms. Though the time commitment is significant, I enjoy the work of building alongside our management teams and being deeply involved in the business. LMM also places greater emphasis on relationships and fit, which are important to me. There is also greater personal autonomy and WLB due to the pace of deals, participants/competitors, and fewer people wanting to be in the LMM space. From a compensation standpoint, I make significantly less on a current comp base than those at my level (and probably below) at MM and MFs. I do have significantly more compensation optionality through carried interest, but that is then highly correlated to both my and the team's ability as investors.
I encourage associates to get as much diversified investment experience as they can to better inform how they can answer some of the criteria mentioned. VPs move all the time, so it isn't set in stone. Move beyond MOIC, IRR, DAW, AUM and first ask yourself what excites you an investor and go from there.
If I had to rank considerations, the top two would be the enjoyment of the work and the people. Most seats will pay you plenty of money, and making 20-30% more is not worth dealing with a toxic culture.
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