Best Tech PE Firms (2022-2023)
I'm currently at very esteemed M&A shop with regard to compensation (both near term and long-term), deal flow, and culture, but think I might want to exit on the premise that investing is a more interesting/rewarding career long-term. For various reasons, I think I would be most attracted to private equity and buyout stage, and am certain that I only want to pursue Tech coverage.
I'm not dying to leave, but if a very attractive opportunity in tech buyout were to present itself, I think in the long run I would regret not pursuing it. As such, I've been wondering which tech-focused buyout firms I should pursue, and would appreciate any input. Are there any other firms in this vintage I'm forgetting? Are there any other obvious factors I should be considering?
TB / SLP / H&F / Vista (still as solid as in the past?) / Warburg (more stage agnostic).
Thoma Bravo
What about tech is so compelling to you? Just curious
Scalability of the companies being bought
That is not unique to tech. Try again or you’re just chasing shiny things.
Software only then go TB. SLP for anything else.
Here's my list of mostly tech-focused shops, probably missed a few but think you can argue going to any of these places over each other depending on location / culture / vertical focus, a couple that are strong that I just don't know much about like Permira
Thoma - Historically strong investors, deep diligence and understand most areas of infra and application software very well. Capable of executing some of the largest / most complicated take privates of public software companies we've seen of which you would learn from and be a part of. Idealistic leader and opportunity to work at some fun US locations like Miami. Actually having some trouble closing financing for some of their latest purchases given the market downturn, probably not going to significantly negatively affect them. Know three associates in their new class and all are some of the smartest people I've come across in banking.
Silverlake - Probably the most storied tech focused shop. Know people in their new class and incoming class for next year that turned down KKR / BX / Carlyle esque shops to join this firm. Very high all-in pay for associates and used to do co-invest option for associates but may stopped that for the incoming cycle. Interesting plays with PIPEs in public markets and have started to venture into growth / early stage, but some of those investments may be in trouble - have played powder very late in a few growth stage cos that have been strongly affected by the market. Probably going to remain at the top for the foreseeable future.
Vista - 1st year has to be in Austin which is admittedly worse than most other 1st tier cities despite the lower COL. Also, comp is good but lower than most other comparable shops. They've objectively underperformed compared to peers, IRR data from LPs suggest they haven't done as well recently, not a huge cause for worry but also their culture doesn't sound great (sharp elbows among associates and the most formal office attire mandate by far). Would probably take every other name on this list over Vista
Insight Partners - Started as a VC focused shop that expanded to growth and now to Buyout. Pipeline for growth associates mostly come A2A from their analyst undergrad pipeline. Really strong returns and just raised a huge fund as well, pretty flexible mandate and hours are incredible - even for buyout which they recruit people for on-cycle. Pioneer in the growth buyout space (buyouts of companies that are typically prime for growth investments) and have strong relationships across the street that allow them to execute buyout deals on high growth companies with little to no cash flow. Great culture and my friends here love it. Allow you to develop a thesis around new verticals and cover them yourself as you get promoted which is pretty cool
TA Associates - Roots are primarily in growth equity but have now expanded to buyout. Based in Boston and returns are solid and teams are pretty diverse in terms of background - as in quite a few consulting friends here. Starting to play in the growth buyout space like Insight as well. Sourcing component but its a good skillset for some people. Culture is intellectual and I've heard kind of make or break
Clearlake - Top tier returns and probably the fastest growing fund in the world the past few years. Invest across industrials, tech and consumer. The most efficient lean shop on the street with 72bn AUM for ~30 Investment professionals. Associates develop a skill set that no other place can provide and invest across growth, buyout, distressed and credit (my one friend here literally does all of this + more) and top tier comp.
Francisco Partners - Heard culture can be tough, but regardless they are smart investors with accelerating fund sizes. Great exits to bschool and an amazing place to learn about tech and buyout
Genstar - Have heard culture is awesome. Nice people, good work-life balance, great comp packages for associates. Have pulled some really great returns from last few funds - believe they just raised $12bn. Probably one of the better performing shops out in SF
Why do people on this site spout the most blatantly inaccurate nonsense about Vista? Just say you know nothing and go
Yeah, my friend the just interned at Vista and this is what they told me.
Associates do not have to be in Austin 1st year. They have their choice between Austin, Chicago, and SF. Pay is inline with competitors and associates get co-invest and phantom carry. Office attire is business casual and hybrid WFH with Wednesday and Friday being WFH. No facetime culture so analysts and associate leave and come in whenever.
Original comment has never spoken to anyone at vista if they think there’s sharp elbows. Super friendly people at the firm, comp is definitely in market/above, but the COL benefit is certainly eroding. Austin is getting pricy.
Any insights on BSchool requirements for these shops?
Clearlake is a great addition to this list but it should be noted that juniors are generalists at Clearlake and that the firm invests in far more than tech.
What is the genstar comp package?
Met with one person at Insight as well that told me nothing but great things, do you have any data points on junior salary?
Why is genstar on this list not in same tier
Analyst in MF PE (KKR/WP/TPG) focusing on tech/software here.
Absolutely mental that you said you would take every other shop on your list over Vista. Vista's 2019 vintage fund's IRR is 16.6% – not bad at all. To put this in context, SLP's 2018 vintage has 16.7% IRR and H&F's 2020 vintage only has 14.9% IRR. Have no idea where you're getting your numbers from. Also, culture is not bad at all. I think the worst culture out of all the firms you mentioned has to be SL.
Also, Insight and TA's buyout teams aren't really that great. They have a much smaller fund to work with than their VC/growth teams and generally work across much smaller deals than Vista/SL/TB. Would only really go to those shops for growth equity, not buyouts.
I would agree, though, that Clearlake is absolutely nutty. Insane returns and are growing rapidly.
In addition to these firms, KKR, WP, Carlyle, TPG, and Advent all have really strong buyout teams in the Bay Area that focus on tech.
Some points on Vista from someone who actually works there:
Associate 1 comp at Vista is 300k (base + bonus) plus an additional ~50k in phantom carry for ~350k all in. Definitely not below street for MF. Vista has also had 38.6% gross IRR since inception (Apollo PE has had 39% gross IRR). Not sure why there is so much misinformation about Vista on WSO
People coping at the reduced associate footprint since they tend to recruit to from the analyst program if I had to guess. Less on cycle spots.
Luminate is a solid software player (and Silver Lake spinout) if you want to get in on close to the ground floor of a firm that seems like it's really going places.
Would you group BayPine in this category as well?
I don't know BayPine very well but my impression is that there are many more senior people at the table already and so the economic pie is already split up quite a bit. Just look at the difference on the team pages to see how many more people there are with the "partner" or "MD" title at BayPine.
Luminate: https://luminatecapital.com/#team
BayPine: https://baypine.com/our-team
There also aren't a ton of people at BayPine who scream "tech buyout". It's a lot of people who spent their career at generalist MFs (Blackstone, KKR, Bain, a Carlyle-related fund) and they know how to tell LPs "we're investing in the digitization of traditional businesses" because that's what everyone says these days but I am not convinced that they can actually do it well. Hollie Haines did exactly that at Silver Lake and has the receipts.
Could you provide a bit more detail on the firm and why you think it's a rising player in the space (differentiated strategy, returns, etc)?
Their returns have been solid thus far and they were very smart through 2021, recognizing that it was a seller's market and getting great monetizations while being very price-disciplined with new investments. Hollie Haines has a sterling reputation and is implementing the Silver Lake playbook at a much more reasonable fund size.
how are the hours at Luminate?
Almost every UMM+ PE fund does software/tech at this point
is it more common to be focused on tech or generalist at said UMM+ funds?
Most of the ones I interviewed with had groups (I.e. tech group, industrial and so on. You accept an offer for a specific group)
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