FoF Primaries Final Round Case Study
Hi everyone, I have a final superday with a large FoF for their primaries position for an associate role. The final in-person case study involves looking at the materials of two funds and choosing which one is the better investment opportunity.
Does anyone have any tips to best prepare for something like this? Appreciate any help!
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How'd it go? Any advice on the types of Q&A you got? I'm approaching a similar situation myself (direct lending to FoF Primaries) and my superday is next week. Shoot me a PM!
bump also interested
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Have not done a primaries case study before but worked at an FoF. High level areas to look at when comparing funds (assuming they follow similar strategies and geo).
Thanks that's super helpful. In terms of the following:
Yes, some people don’t charge 2 and 20 but also super carry (25% carry e.g.)
4. The easiest is to just try and assess if they have a value creation approach (i.e. operating partners) versus just buying companies and slapping leverage on them and wait for it to make money. There’s not a lot of science to this
5. You want to see some fund size increase but not too much (question is if they are changing the strategy to keep growing and accumulating AuM; e.g. do they need to do bigger deals which they haven’t done so not consistent in terms of strategy)
Pro tip for someone who's done this and got the job (then moved to direct PE many years later): you will wow them if you know a few things:
Thank you! Appreciate your insights here. In terms of evaluating fund performance, would you tend to give more weighting towards older vintages for evaluating performance given more recent ones will have lower returns?
What's up, I was wondering if you could PM me. Awfully curious about the FoF to direct PE move that you made
It's quite simple: I started in the PE team of a large European pension fund, where I worked for ~3 years. Went for an M7 MBA in the US, recruited into the PE / CDD team of an MBB and then recruited into a MM tech firm (at the time; now joining the big boys leagues). It helped being in Europe where being older is not held against you, also the genitalia was the right sort
A very nuanced response is needed. Most likely, the recent deal activity reflects the likeliest investment environment, the current team, strategy, etc. It will be quite common that for very well-performing funds, the vintages increase in size significantly though. So Fund I is $200m, Fund II raised 4 years later is $400m, Fund III is $700m and now they're trying to raise Fund IV for $1.2bn.
Are the deals done in Fund II really representative of what's going to happen with a fund 3x bigger? On the one hand, yes, if the team is consistently the same (look esp. for partners / true deal leads) and they are following a similar strategy ("we've always done tech but scaled the types of companies we look for").
But on the other hand, it's an awfully big difference between sourcing deals marketed by a one-man shop in Chattanooga, vs. Jeffries. Skillsets can be similar but also subtly different - you gotta win in real auctions now, and compete much harder.
So: look at history and see what you can extrapolate. Should be an evolution that's natural (usually not crazy fund size increase / same-ish team / similar sector coverage / "we began doubling down on the sector we saw our best returns in") vs. forced one way or another.
But you will need to take a view on the performance of the recent vintages, and here is where:
Bump, also curious
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