Clearlake 2024 Update
Been looking around for updated info but most stuff seems to be stale on Clearlake. Would appreciate to get some details on how the firm positions vs other similar funds through 2024/going into 2025? Seems they run a lean team with good investment names but recent news seems to show that some portcos have been struggling - why is this the case? Will this be an issue for future fundraising and is it likely they'll continue to see the "top quartile" returns they talk about?
Also, any details on comp compared to other similar funds or whether they have a 2/3 and out program or have senior track potential? Thanks in advance for any details.
R u in a process w them? HSP told me no activity till Jan for them but would greatly appreciate any info if this is not the case
Firm lowkey cooked
Clearlake has at least 10 portcos with unsustainable capital structures and $10B+ of distressed debt heaped on its portcos. All or most of them will probably execute some type of LME(s), and I predict half of those will go through a restructuring or BK. Even with an LME or two AND rates down a few hundred bps, the cap structures still don't work without considerable volume growth. I would love to see Clearlake's fund VIII fundraising deck and what equity marks they are marketing: they half raised like half of the $15B target. Goes to show you can raise for a decade off the success of 1-2 good funds.
Clearlake and Platinum appear pretty cooked right now. WheelPros just went BK after they rolled a rumored 5x+ return into a huge continuation vehicle.
As it relates to your experience, I'm sure you will do a new deal or two, but be prepared to do some serious LME/ RX work while you're there. You're correct, they run an extremely lean squad. But IMO they are morphing into a fee/AUM gatherer vs returns-focused. Unfortunately while everyone else was wary of valuations in peak-ZIRP/postCOVID, they were doubling down and shelling out dollars at max leverage available.
This is super apt
There was recently an article I think in WSJ Pro PE that literally had a table of their assets and the debt trading levels
The top level is already rich and the fund size has grown to a point where it’s about the mgmt fee / alternative monetization as opposed to deal based economics, which there won’t be much of for a while anyway
Struggling portfolios create 100 hour weeks as you are Rx+ops and also trying to buy the fund out of underperformance
I would avoid Clearlake right now if you have other options, which you probably do as they hire pretty pedigreed people generally. Maybe that will change
great prediction as their 5th portco to go through lme happened this yr lmao
Any details on interview process ? Challenging, case studies, etc
I work in RX. You don’t want to know how many of their portcos we’ve looked at.
Avoid. Avoid. Avoid.
So many zeroes, the math doesn’t work out.
Curious - do you guys do the post LME math and walk to a return? How do you get to the zeroes?
Don't have first-hand knowledge, but recently departed talent has echoed much of the above.
Sounds like a sinking ship situation.
Is it really that bad, to avoid as an associate? Any insight on hours / culture?
If you have other options, would take those. If not, would take this knowing that there is likely not going to be a sustainable LT path here
Feel really bad for some of the mid seniors that joined this firm and now their carry allocations are worth nothing (if they did get allocation from the earlier funds).
Juniors will be ok - was not a lot of money anyways. Partners will be OK and have probably been made rich by management fees
Avoid the dumpster fire of a firm. The only people who like them are sponsors, LevFin, and RX bankers because they have made bankers an insane amount of money in fees and are continuing to do so. Firm will without a doubt see a down fund, and expect massive upheaval and firings even at the senior level as the buck has to stop somewhere and they have to show the LPsthat something has changed. It makes sense given their broader strategy even back when their returns were good, but it has absolutely crashed and burned spectacularly. Would take any other fund in the $10Bn+ fund size range.
Revisiting this thread and wanted to follow up. Talked to someone who has seen a recent fundraising deck. Talk to any RX banker and the portfolio's marks and banke rumors simply can't be reconciled. Whoever Clearklake's auditor is must have worked at Enron, would love how they arrive at a valuation where there deals headed to zero are marked at 2-3+x. Probably a dozen portcos on their way to zero or lenders taking the keys. These portcos have mostly done their first round of "gimmes" on LMEs and some are already facing liquidity challenges again and are now facing tighter docs with aggressive, no BS lenders (Elliott, Oaktree, Apollo etc) heavily involved in the debt.
I genuinely welcome their demise.
That being said, with very questionable marks, they are still going to raise a very large fund and potentially hit target. I can't believe LPs are buying what Clearlake is selling right now, makes me lose a little respect for them. I would avoid as an associate, you're going to be doing way more workout activity than new deals.
Clearlake is truly the laughing stock of tech PE.
A college friend worked there, and told me when they did the Cornerstone take-private in 2021 for $5.2B (which Qatalyst got them to massively overpay for), the team did almost no diligence and thought they could just roll up assets under Cornerstone and make it a successful exit. That business has performed so poorly under Clearlake that it led to their hand-picked CFO Ryan Courson leaving and burning all bridges with Clearlake, presumably because his equity was going to be worth nothing. That kind of thing would never happen at firm's like H&F and Thoma.
Avoid at all costs. You will be learning from the worst in tech PE if you go there, and won’t have a marketable experience to take elsewhere.
That’s hilarious haha. 2021 was peak-comedy for SaaS valuations and Clearlake was leading the clown show
like thoma?
One guy runs the whole firm and not the place to be right now due to underwater investments.
What’s the latest update here? Would appreciate additional color
Bump
How do they rank comp wise? Also any updated views? Heard they are announcing a 15bn fund soon
Curious about this as well. Any new insights?
Recent BBG article said they have $13/15 for their Fund VIII raised. How is this possible in current market conditions and with previous companies under financial distress?
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