Does anyone have any insight on HIG comp, culture, and returns? Any details on their growth fund? I noticed that their last fund is from 2018, which seems abnormal in the industry. Any insights would be helpful.
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https://www.wallstreetoasis.com/forum/private-equity/hig-in-2024 Linked thread has a lot on HIG. HIG Growth as it stood (minority growth investments) is dead; Fund IV is in-market currently (heard that fundraising's been going pretty strong), but they've pivoted the strategy to "Small Cap & Growth Buyouts" that's going to be ~75% LMM and ~25% growth-oriented, but all focused on control transactions.
HIG in general deploys capital at a slower rate than some other shops (largely due to fee structure as HIG collects the 2% the whole time instead of only when its deployed, like most PE firms, so HIG doesn't have an incentive to deploy as quickly as possible to collect management fees), but heard that the last growth fund deployed especially slowly because 1) it was much larger than the previous fund, and 2) IC's very value-oriented and just couldn't get comfortable with the valuations of the deals growth brought to them and kept shooting down investments. Both senior management and LPs' recognition that at their core, HIG IPs' competency lies in value-oriented investment, ultimately led them to pivot Fund IV back to (mainly value oriented) buyout.
As someone who used to work at an asset allocator, above is correct. Through the 2010s HIG went through an expansion phase where they tried to start a strategy for everything. Thing is, HIG has a reputation for being value investors in the middle market. Are they perhaps the most consistent and pedigreed MM value investor in the alternative asset space? Yes, but that ended up being a double-edged sword for all of these new strategies because LPs knew that HIG's core DNA has been and will always be disciplined value investing for as long as the current senior management are around. Over the past few years, I think HIG's management realized that it's best to stick with strategies tangential to its core competencies like HIG Infrastructure and expanding its European fund family, and has pivoted away from all of these extra non-core strategies like minority growth investing and HTP (tech-dedicated fund)
Almost every fund collects management fee on commitments, this comment doesn’t make sense:
”HIG collects the 2% the whole time instead of only when its deployed, like most PE firms, so HIG doesn't have an incentive to deploy as quickly as possible to collect management fees“
Most funds step down after investment period, assume HIG doesn’t
I have 2 friends that worked there.
The fund was investing in smaller deals than what you would expect, and most had a value tilt to them.
I think that's part of why it's quite sweaty. They retrade a lot too.
They retrade a lot because every time they bring a new bid to IC the execs shoot it down lol.
They are the LMM version of Platinum Equity lol
(I currently work in one of the buyout funds) and all the above is correct. Growth is now Small Cap + Growth combined fund. And the overall tilt is much more buyout - it’s allowing the firm to continue executing the core original LMM strategy. The 25% that’s growth is not truly “growth equity” how you tech guys would think about it.
Objectively, HIG as a firm is doing very well (I’m not a kool-aid drinker or HIG tattooed on forehead). But consistent string of solid buyout exits over past 3+ years. Several 5-10x MOIC. Successful fundraise for MM, LBO, Infra (not as much Advantage). Growing headcount (one of the few firms consistently hiring MBA VPs last couple years, will take the occasional lateral too). They’ll probably get to $100B AUM. While some MM/UMMs have imploded since COVID, HIG clearly one of the winners.
But can be tough/demanding place to work. Depending on city/fund, there can definitely be legacy hardo culture and the occasional bad apple etc. Not a perfect place by any means.
How would you rank culture / sweatiness across offices within LBO and MM?
It’s interesting I’ve seen different responses to that Q on different threads over the years. Its not one unanimous view. Also can change over time depending on couple key people etc.
Also for MM and LBO, I think as the firm has grown things have become bit more standardized so across those core buyout funds / offices there will be some degree of commonality in the experience. It’s not going to be radically different for associate A vs B where you feel you’re at different company.
With that said, my two cents (others may disagree):
— SF is probably the most well rounded office. Has LBO/MM/Adv (only office with all 3). Bit more collegial / nerdy. Tends to have more MDs who focus on stuff like healthcare or tech services (but has everything to be clear)
— Miami is the legacy corporate HQ. All the head guys sit there including MM and LBO (and small cap / growth) fund heads. So everything trickles down from there.
— NYC is still NYC. For example MM spikes very hard when chasing live deal in competitive process.
— Boston is culturally seen as most laid back. Very sharp and capable. Just less likely to work 100 hours for no reasons.
Can you share more about what drives HIG's returns? I understand they're high volume, bidding on any deal that comes through and mostly low quality cheap assets. But how do they filter for reasonable quality? Is it mostly a question of negotiating hard to buy higher risk assets dirt cheap, or is there a lot of operational transformation driven (and any levers in particular)?
If you could give examples of the diligence approach / strategy in practice, that would be great!
My general tilt is to avoid the growth funds within buyout funds as a career starting point if you have other options.. Most of them struggle to scale given fundamental LBO mindset vs growth minority mindset and certainly valuations. HIG, Permira have both shut their growth funds, KKR, BX have struggled. It is tough for them to win against GA, TA, Advent etc and hence most of them have or will pivot to essentially a mid market buyout strategy (1bn EV) vs buyouts (>1bn EV)..
Go where that pivot has already happened else its messy
Where had you seen this re: Permira? Seems like they still have their growth fund (PGO), or at least it's on their website as a strategy and they seem to still have the team for it
If they haven’t shutdown it is just a matter of time given performance.
It’s shut.. key team members have left but obviously like anything else in a fund they will need to play out till end of current fund
If you mean Advent Tech by Growth, then you’re very wrong. They might’ve raised their last fund already
are they doing well? thoughts on that group in general?
Del
Del
Work for one the largest/oldest single f.offices in LatAm. Don’t have detail on Growth fund but as for the overall HIG brand we see them as perhaps in the top 1-3 PEs in the region (along with Advent and GA -aware GA is growth but still “seen” as PE-).
I thought recently GA's returns were average?
What is the latest on HIG Bayside?
Have a close friend at HIG growth, apparently horrible culture and subpar returns. Seniors use pedigree to hide behind lack of deal experience
Anybody have further details on the MM fund specifically, going to be fundraising soon (think last one was $5.5bn)? How is the associate experience?
If you want to do traditional growth investing (minority investments) avoid HIG Growth. The growth strategy is effectively shuttering because of poor fundraising, and as others have noted, it’s not what HIG is good at.
With that being said, as I understand HIG growth is transitioning into “Small Cap & Growth Buyouts.” Don’t know how the team is structured (e.g., if current growth team members will be transitioned into the team), but if you’re into buyout investing that’s probably a pretty good fund to recruit for and join. HIG’s specialty has always been LMM value buyouts, and it seems like that’s the role the new strategy’s going to take on as the LBO fund has transitioned out of the LMM market. If I were a betting man, I’d certainly wager that the new strategy will do well.
Weird between small cap and their mm fund (not to mention the advantage fund which also is mm focused), where does flagship lbo fit then?
Small Cap is less than $15M EBITDA, LBO is $15-40M EBITDA, MM is >$40M EBITDA. Advantage is >$40M EBITDA for higher growth businesses
Headhunter mentioned they are recruiting for growth, so seems like they are hiring separate for growth versus small cap. Definitely not worth joining growth.
Have a friend that worked in growth, would 100% avoid, not a great culture… simple linkedin search would show that the team is actively being trimmed and theres been a mass exodus of associates recently
H.I.G. is one of the best places out there to learn lower mid-market, value investing. They are masters in deal structuring, in doing great diligence and being accepting of pretty much any risk at a certain cost. The IC does a very good job of making sure the filter is good and that they don't overpay for businesses.
Comp wise, in the larger funds MM in particular, and now the LBO fund (which has $2bn+ size), they are quite fair on comp (different from the impression of H.I.G. from 10+ years ago). Fair but not overly generous. Carry can still be stingy because there are a lot of mouths to feed, particularly in the LBO fund or the new Small Cap and growth fund where the model is to do more deals, know that there will be some impairments, but have a few home run deals that return the fund or more. Always read the fine print on comp and vesting etc, because they are masters at structuring these things too.
There are definitely some db characters who work there who I won't name, but that probably is the case anywhere. The culture is unforgiving and somewhat ruthless, and is eager to replace an underperformer, rarely will a second chance be given. Bad apples are not often reprimanded for poor behavior as long as they generate returns.
There are also good folks at the firm who take care of juniors and make sure they do well. It's a mix.
The senior team who sits on IC of all deals are amazing investors, so a lot to learn by observing the types of risks they take and what they avoid. Historically the culture was very closed door, where even IC meetings were not open to the whole fund, but they are starting to be a bit more open.
The strength is in control investing, so would not work for something that is looking for minority. The growth strategy with the combination of small cap seems like another "mini LBO" than growth. That should be a great for H.I.G.'s strategy and it's led by good folks, so I expect that strategy to be successful.
Culturally, it's also not unfortunately a fun place to be a woman, but maybe that's the case across the industry. This is old school private equity, and these are still Miami guys with those values. The organization has tried to be better (which I do appreciate) but there are still characters who live the old life.
this is v accurate
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