Looking for some insight on the consumer or retail PE landscape. Coming from a C/R group at a BB and interested in PE. Who are the big players in Consumer Retail PE? Which firms are MM but growing quickly? What is the outlook for consumer retail PE in general as opposed to other industries like tech, healthcare etc with regard to PE?
Thanks
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I’m prob not gonna say anything groundbreaking or that isnt already obvious / well understood. But it’s definitely challenged. More niche and smaller landscape. Not as transferable to other types of PE. I you start in consumer it’s likely harder to transfer elsewhere. Lots of MF have pulled back from it. The 2020-2021 PE consumer large-cap IPOs got crushed. Consumer growth as a subclass even worse. Harder to underwrite cash flows. interest rates etc.
There’s obv still couple excellent seats for it (someone else can list out) but thinking about long term career, all else equal you will see more 10-20 year opportunity in your clsssic industrials/services PE, or tech vertical or healthcare vertical.
Just my 2 cents, to know going into it
Echo the above comment. I would add I think consumer is generally a better category to be a founder in than an investor. Too difficult to predict future trends on the timeline that a PE investor underwrites too - 5 yrs for their own hold but 5 yrs after for the next investor as well.
A ton of PE funds have gotten burned in this space and you see some notable retreats out of the sector (eg Carlyle).
I may be biased (in consumer PE) but think there are tons of opportunities still present in the space as a capital allocator. While MFs have struck out (this was incredibly obvious by just just looking at their C&R portfolio...TPG/Smartsweets for instance...really?..), there are still great seats and returns in the MM/LMM band.
L Catt and TSG have gone so upstream that they are printing relatively modest returns but that's going to be the case as you go upstream for any sector in PE. Firms like VMG, Main Post, and Stride Consumer (former Castanea guys) have done quite well from what I know. Other MM/LMM funds on the rise like Cavu Consumer Partners (Poppi was a slam dunk), Prelude Growth Partners (Summer Fridays), Stripes (a24), etc. seem to continue to do well. There are others in that growth/LMM bucket too that seem to be deploying and exiting businesses quite nicely (North Castle, Verlinvest, Monogram, Sonoma, Silas, Sandbridge, BFG).
Generalist consumer strategy doesn't work that well nowadays. You really have to be specialized and run a lean team. That said, if consumer excites you, then this is the right industry and job for you.
Thanks for the insight! Mind if I shoot you a pm? Looking to learn more about consumer and shops that align with what I'm looking to do. Currently in tech and b2b saas makes me go zzzz and would love to chat.
dm me
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