How can you tell if it's a SOLID PE shop?

There is a recent active thread about mega-funds. Reading the thread got me thinking... How can you separate SOLID PE shops from the rest?

I would think, just because the firm's AUM is multi-billion $, that can not be a sole indication that the firm is solid. I am sure there are a lot of smaller shops with relatively smaller AUM that are very solid.

So, aside from obvious prestige, AUM.... Suppose you encountered a PE shop whose name you have never heard about before. While studying the firm, what would you try to find out the firm that would help you decide whether or not it's a solid/healthy firm?

Any thoughts/inputs would be appreciated.

4 Comments
 

Look at the fund's track record of performance since its founding. In PE, the lion's share of the profits come from carried interest. Higher profits help attract talented people and consistent reutrns in excess of the rest of the industry attracts investor interest.

 

I could be entirely wrong, but I always liked looking at AUM to people. A higher ratio is better. Also means more money for you if you get in, theoretically, or all else equal, or [insert academic disclaimer here].

 
Best Response

what type of experience are you looking for?

do u want a role where you spend your time doing financial analysis, dealing with bankers and clients. Or where you are spending most of your sourcing deals by cold calling hundreds of companies a month.

Summit Partners and TA Associates are both solid shops that have the sourcing model and places like H&F, carlyle have the former business model for their associates.

------------ I'm making it up as I go along.
 

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