CD&R Updates
Hi monkeys, what’s the latest on Cd&R culture, comp, and associate experience?
Interested in tech & industrials teams.
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Culture sucks, comp is good, experience is amazing. Super respected name
Would say culture is better than historically (solid B and getting better...but group dependent), comp is really good (pay above the street, 1st years pulled in +/- $400k all in last year, experience is really good (also group dependent). Extremely solid fund performance (3-4x MOI past several funds), especially when you don't benchmark to all-tech funds that rode the wave the past 5-8 years.
Fund performance is solid but 3-4x is stretching it. Fund VIII was a clunker (David's Bridal went to 0), Funds IX and X are largely TBD because exits are hard in the current market. Maybe some superstars in there, but also some dogs still in the portfolio (Wilsonart sale blew up a few years ago and has been in the portfolio for a decade now).
Is it realistically possible to land an offer without internal connections to the firm? CD&R always struck me as a super old school firm
Most kids getting offers to MFs have no connection. It's honestly more common in IB.
They now hand out group-specific offers during recruiting. Tech team is newer, building it out. Industrials is their bigger team - CEO is in that group. Seem very nice but definitely give off very professional, buttoned-up vibes. Heard comp is very good.
Honestly this is a good thing just for transparency / fit purposes. Industrials has *always* been kind of a snooty place there, with bad WLB to match: I know of associates who (invariably from GS / MS / PJT) were given "preparatory" portco assignments during their free time in between banking and PE from the team, hoping to lock them in before making them unofficially dedicated to the team for their two years. Kind of a judgmental / aloof lot, but also undeniably brilliant. Weird returns recently though
Tech is newer but at least their first few hires were a mix of top culture AND quality. Services (non-tech) has always been the "nice" spot to land, with the exception of some oddball principals. Edit: I have no idea to what extent or not services as a standalone outside of tech is still a thing team-wise.
Healthcare was a box of chocolates, from culture to smarts to mentorship.
Consumer is small and kinda weird--not grindy on balance, but they have rough patches like with any MF job and they only have so many processes going at a certain time; quality is...fine? They've done a handful of big deals (more in Europe) but idk if they're distinguished in the space really.
Consumer deal in Europe (Morrisons) is looking ill timed - that's not a reflection on the fund as a whole, but worth mentioning.
What is the culture like in the European tech team / seniors (since they don’t really have a team yet)? And services team?
Also are they good at tech in the US? What types of deals do they do well in - not clear how their experience will benefit them in tech
Anyone know If they’re recruiting for 23 or 24 still?
Any info on perks at work (Ubers, dinner stipend, etc?)
It matters because otherwise you’re not signing? Lmao
Hey man, I signed with HIG over CD&R because I liked the catered meals better
Well I signed with Chipotle over CD&R and now I get free chipotle catering every day
Yes, have luxury of mult offers, thx
London office: £35 dinner after 7 (x2 on weekends), Uber Exec after 8, on-site Chef preparing breakfast & lunch buffet, 10% of base as pension contribution (incremental), 50% gym subsidy, good private healthcare insurance
Are you able to comment on London office's culture and newer tech team? Heard it's sweaty and hierarchical, also difficult to build up the European platform. How hard is it to get promoted too?
Are they doing off cycle recruiting rn? I know they’ve taken some kids on cycle but wondering if they’re still actively recruiting. Also which HH do they use?
Any idea if they hire externally for VP roles? (e.g. if you did 2 years at a MF then wanted to go there)
They do, but rarely. They hired a handful of folks at the principal (their VP equivalent) level a few months ago with Gold Coast.
Any insight into what their interview process looks like ?
1 screen, 1 model, 1 model debrief, 4-5 convos after including deal walkthru and cases.
curious to know if their model was more complicated than typical peak models given CD&R's record with more complex transactions
Anything on their financial services team? They recently hired the ex-CEO of Marsh McLennan as an Operating Partner, and they also hired a guy from TowerBrook to head the vertical, so it looks like they'll target segments of the sector where roll-up transactions are the deal thesis.
Bump
They just acquired Focus Financial
.
Any chance you could repost or PM?
Does anyone know how the WLB/culture in the healthcare group is?
Do they promote after 2 years to VP or is it to senior associate?
Does anyone have insight into what their modeling test is like? I have one coming up next week and would appreciate any help.
Interested too
Which recruiter does CD&R use?
CPI
For comp, I know base is $175k as of 2023. Not sure about bonus.
any updated thoughts on the tech team?
This thread has not aged well. Agilon doing horribly and cd&r being sued for securities fraud re its 23 SPO.
Cornerstone building brand 1L bonds trade at 14%…unsecureds at 20% imply complete impairment of capital
Wilsonart, same story as cornerstone
vialto is a complete & unmitigated disaster
Artera and Brand Industrial and Multi color all struggling. All firms are overlevered, underinvesting in capex, face cyclical headwinds, and for brand secular headwinds too
Petsaf is doing horribly. Bond price chart tells the story there. Or just pull up woof stock - pet is struggling as category with competitive issues, channel conflict, v low entry barriers, and slowing demand growth, not to mention tariffs
Prestige does not equal strong returns or good investments. Financial engineering (transferring risk from the efficient public equity market to the HY bond market, effectively) and opex cuts work when rates are low, geopolitical volatility is low, and when markets have the appetite to buy low growth, underinvested assets at over 10x. When even Amazon trades at 12-13x forward ebitda I have no idea how cd&r can exit their turds at accretive irr
Accurate & fair information about those handful of PortCos (out of >30 active ones) but pretty simplistic and emotionally loaded conclusions.
FXI is shit but 20/21 vintages are shit across the board; they’ll all have long holding periods and relative performance doesn’t mean much until 3+ years from now.
CD&R Industrials has always had large cyclical exposure by design, with downturns being used for value creation via transformational M&A, opportunistic capital deployment (eg buying debt below par), and operational improvements.
US has been in the longest (yes not steepest) industrial and construction down-cycle in history, none of those investments were underwritten on a 12x exit multiple (still aren’t), and virtually all of them will be fine (couple of long drags like Artera & Brand but plenty of home runs too).
Agilon returned 17x MOI already (on a 2% FIX investment), ridiculous to imply that getting caught since in growth re-rating and secular HC primary services pressure is a poster child of bad investment judgement.
FVIII, FIX, FX and FXII are very comfortably first quartile funds, and it’s not like FXI is losing money or won’t hit the hurdle.
FXII is a 2023 vintage that has DPI already, is marked at 1.5x (despite dilution of recently closed investments at costs) and has broad-based contribution of plenty of clear winners.
I sleep like a baby knowing that our differentiation and relative performance today is much stronger today than it was 5 years ago; there’s no other large cap GP that saw 4-5x growth in fund size and managed to remain a net distributor (in particular after 23/24, where we’ve distributed almost $15b) and has anything close to 3.5-4x Gross MOI in any of their funds, let alone the last 3 of 4 (and likely 4 of 5 with FXII maturing).
CVC and Advent have been doing well too, but every other shop had or will have downsized new vintages, deployed little and returned even less post Ukraine.
We expect continued fund size growth with FXIII, happy for you to revisit this statement a year from now.
Not saying that the firm didn’t do some deals we shouldn’t have and were clear diligence misses or misjudgments; Vialto definitely should not have happened (team got the standalone cost structure / base earnings materially wrong), similar to Morrisons or the pet category deals (Petsafe, Covetrus); just saying that I could replicate your post with similar (& worse) examples for literally every other large cap fund.
It’s either intellectual incompetence, laziness or dishonesty to make these kind of statements in a public forum on any fund based on a small selection of current marks on specific PortCos (none of which you were around for the initial underwriting) and pretend that you’re capable of drawing any conclusions on a shop’s future or structural investment capabilities.
Thank you for coming to my TED talk.
I find it pretty funny that we are coworkers who have the same basic criticism of the commenter in question, but I’m so much less bullish on the funds going forward and what kind of edge we ostensibly have over the industry.
(Also, I think it would take a fairly tortured definition to define all the past funds you listed as “top quartile” historically.)
But hey, maybe I’m wrong and Artera is gonna turn into not a total write-down. Wouldn’t be shocked if somebody pays more attention in Monday morning meetings than I. Let’s grab lunch this week or something.
Commenter just above me makes some good points but also seems to just not understand what the value prop of CD&R is as a $26 billion fund that it wasn’t as a kind of plucky yet pioneering corporate carve-out merchant / never took a zero except for underestimating the power of online shopping for wedding dresses identity-having $10 billion fund even less than a decade ago. Hell people on this site used it to call it a “UMM” like three funds ago!
Like many megafunds the brass at CD&R have essentially made two, somewhat paradoxical choices:
1. Everything is growth now—Jack Welch is literally dead and there’s no amount of cost-cutting that is so differentiated that every bidder isn’t paying for its benefits upfront now, and so will CD&R to stay in a process (and at this size, pretty much everything is a process now, even approaches to avoid a process are competitive except for the rarest of priority creative solutions, which to the firm’s credit still pop up occasionally.)
2. The hurdle is lower now—no one ever got fired recommending IBM and no pension head is gonna get fired buying CD&R (or BX, or H&F). You know what that means? Your job is not to maximize the marginal return on your fund dollar, it’s to produce a 2-2.5x on a boatload of deployed cash; let the billion dollar funds keep their top quartiles, that’s not the game anymore.
In practice, what this means is that the portfolio will be a mix of some kind of boring levered cash cows with some buy and build buffering some upside potential that’s riskier than “core CD&R.”
So, returning to the commenter’s story, yes agilon is doing not great recently but CD&R also took most of their money off the table beforehand at a truly astronomical return for a fund of this size (the lawsuit just isn’t a thing, happens all the time). Yes, artera is a 0 and Brand is distressed but if anything this low-DPI market allows for more recovery optionality than is traditional—Brand might be a 0.5-1x that was straight up set to be 0 24 months prior. Cynosure was a 0 structured to look like the exit was a “merger” and MOD…yeah maybe consumer growth wasn’t ever going to be the firm’s sweet spot. But look on the bright side: SunSource dividend recapped, Cheney just sold to a strategic at a 4x, Sirius sold for some absurd IRR because the firm only held it for 18 months—if they ride out dogs like Pet through normalcy, they’re still somehow going to end up at about a 2x! (Also, dude, Wilsonart and Cornerstone, the latter of which might have money off the table pre-its merger, are from the fund before the $10bn one, LPs don’t give a shit about them any more.)
Look, is the firm perfect? Of course not, it’s not exactly hitting 4-baggers at scale. Is its NA consumer presence sketchy? Of course. Is its healthcare practice tilted toward a few Key Men risk-wise? Yup. Was having a fleet of new Industrial partners ascend around the time of a new Industrial CEO a factor in the firm stretching beyond its skis on a few industrial deals in succession that now appeared to have soured in sync? Makes you think.
But the idea that the brand name is hiding some kind of rotting franchise is a shade more immature than the analysis that’s worth this forum’s time.
can you elaborate on the HC practice key men risk?
Not breaking news that’s not on our team page—we have three full-time North America HC partners, one of whom was hired last year and two of whom often do deals as a tandem. There was another HC partner essentially fired last year. The key man risk is that if one of these people (especially one in particular) gets poached, the franchise becomes kinda iffy.
The principal ranks are also numerous yet young in that vertical—compare that to industrials where the midlevel talent was so quality and experienced that a legacy industrials partner was moved to consumer, a legacy consumer partner was all but retired, an industrials partner became CEO, two new industrials partners were named, and there are still one-two industrials midlevels who I think could step in to perform as partners essentially today.
Also back to HC, beyond getting poached, if one “deal idea” turns out poorly, that’s an overwhelmingly larger mix of the overall idea batch / deal batch than at peer HC groups.
any more specific info on the tech vertical that you can share?
Likewise, not much to say that’s not apparent from the team page. Tech is essentially just the retrofit name for services (which I guess Industrials would technically buy the Trugreens of the world in the “new” model), the firm didn’t really dabble in software until the Agarwal and Hawn hires. Midlevels are built up more by lateral hires than repurposing homegrown talent, which is sort of true firmwide over the past 5 years but especially true in this vertical, though it’s small numbers so some idiosyncratic things like the financials partner hiring, location changes, etc. make it seem more drastic than it is.
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