How are strategies and investment considerations different for Growth Equity vs traditional PE?
Asking in the context of how I should re-frame my interview responses to be tailored for growth equity, rather than PE. A few questions:
- what are the implications of minority ownership? cannot change capital structure? less active management of portcos?
- why does Growth Equity use less debt / if any, compared to PE? Is it because EBITDA negative companies are not attractive to lenders and interest rates would be extremely high? I imagine the debt covenants have high risk of being broken
- How do strategies in growth equity differ compared to PE? Is it less buy-and-build? More organic growth? Speaking of which, if the Growth Equity firm has a minority interest in the company, can they even execute on a roll-up strategy? (i.e., since they don't have a controlling stake in the company) Based on that, seems like having a good management team that aligns with your strategic vision might be a critical part of diligence
Thoughts?
Unrelated, what are some good questions to ask at the end of the interview?
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