Any differences in fundraising trajectory / ASO experience / exits in MF Tech PE? What names come to mind as the cream of crop for banking analysts in top TMT groups?
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Thoma, Vista, Silver Lake, Francisco, and H&F come to mind.
Other MFs have pretty good tech platforms (e.g., WP, Hg) but the names above are generally the best software investors in the space
Some strong players at MM level are Genstar AKKR and Rubicon
Are they screwed because of AI or is that too simple? Public Saas has been crushed…
How does FP compare to these others? Are they viewed as a true comp to TB / SL?
among these top names, which ones are better spots to start at as an associate now and how do you think about evaluating opportunities? seems like Thoma, FP, AKKR have good recent returns and growing fund sizes while Vista, SL, H&F momentum has been slower
Thoughts on Hg?
Veritas and Silver Lake. SaaS is cooked
Agreed; both of these names have a better ‘angle’ to them (Veritas with government / defense industries and SL playing on the tech-enablement edge).
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Silver Lake might be cooked? Directionally, they overindexed to TMT verticals excluding traditional vanilla software buyout [ie entertainment, semis etc] and had poor fund returns. Around 2023 SLP told LPs they were going back to their roots of classic software buyout, and made massive investments in companies like Qualtrics
Will Qualtrics be "cooked" as agentic AI disintermediates basic survey orchestration? Quite possibly
SLP might have missed boat in overinvesting into atypical TMT companies, and then re-missed boat by pivoting back into SaaS before AI-driven concerns nuked valuations
This is strawman postmortem
Silver Lake is not cooked. LP's will continue to give them capital. Everyone knows the ZIRP-era was a terrible time to buy businesses in software. Lots of capital being allocated to software with as software grows as a share of GDP with AI. SaaS has both AI-driven concerns for the highly-likely to be disrupted business who are trading terribly publically and privately and also insane multiples for businesses that are likely to benefit from AI (i.e. infra names like MongoDB who provide backend modern databases).
One view on good firms in each bucket:
Traditional MFs: WP, Advent, Permira, H&F, TPG
Specialist MFs: Thoma, SL, Vista, Insight
UMM: FP, Genstar, TA, Summit
MM: AKKR, Brighton Park, FTV, Silversmith, Five Arrows
LMM: JMI, Serent, ParkerGale
you lumped growth and buyout together. Should separate as they're very different.
If growth, you're missing great hill and PSG
LMm buyout should also have cove hill
Would FP not be bucketed with Thoma and Vista at this point? Not saying your bucketing is wrong, just trying to understand perception of FP vs. software specialist funds.
Materially smaller flagship fund of 13.5bn for FP vs. Vista's 20bn and TB at 24bn. FP also staffs across flagship + MM fund afaik. Just smaller check sizes and fund size. Elite name in the tech world; think they are there with the TA's/Hg/Summit's of the world in being the premier UMM software investors. You should be trying to solve for software effective fund size / AUM over the total fund size of the platform if interest is solely software. Genstar is a 10bn fund, but it's not all software whilst AKKR is also a top performing fund that's a 5.3bn fund that's all software.
FP/Vista/Thoma all have different approaches. FP brags about not having losses; TB cares less about that and tries to get more outsized very-high IRR/MOIC deals + buy and bulids, even if some deals do not work out. Vista's whole thing is their best practices operational playbook. FP is far more conservative in what they look at / where they bid than Vista or TB, both of who are notoriously aggressive bidders for businesses they like. There's a quote out there by DJ from FP that he always thinks they are one investment away from going out as a firm; I am not sure Orlando Bravo or Robert Smith feels that way.
Edit: corrected typo regarding TB fund size to the correct 24bn, not 34bn.
I think approach is completely different. TB brags only about beating FP in having higher bid. Yes, higher bids work for a “MF”, but long term, FP never thinks about doing the same strategy as MF
Would add Hg too
Why would u wanna do MF size deal for tech? I think everyone now realizes it’s better to stay in Growth/MM/UMM for next step in tech
There are 15-20 nearly identical MM firms in the 100-500m EV range. IRRs have been competed down over the last 3 years
But it is still better than overpaying for every single asset by MFs lmao
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