How many Portcos is too many
What's the maximum number of portcos an associate and vp can handle at once
How about if your firm has a hands on strategy, like distressed or buy-and-build
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If hands on like turnaround, I’d say for VP it’s 3 portco’s with not all on fire at once. For associates it’s likely 2 portco’s and still have some capacity to get swung to new deals that come in.
Echoing your thoughts here – I agree completely
Spitballing, I'd say an associate can handle 3-4 max (assuming fairly rigorous reporting requirements, standard board cadence, active M&A) and mid-level (VP, etc.) can handle more like 5-6. Mindshare and scheduling becomes difficult beyond that.
That seems like a lot but maybe I'm just not working hard enough. Are you having weekly calls with ceo and cfo? Weekly cash flow forecasts? Handholding on fp&a so you get to intelligent answers?
I was assuming max, not necessarily comfortable. I assumed bi-weekly (2/month) CFO and CEO calls (separate) for probably 2/3 of companies, plus monthly reporting calls and quarterly board meetings (for all companies).
I feel like this is more of a growth, hands off strategy. I can’t imagine a turn around or value investment strategy operating like this and getting enough coverage across its portfolio.
Senior Associate - currently involved with 4, but it feels like I am maxed out with other live deals, add-on support and general portco support.
Associates - 4 is the absolute max, I lived it through my associate years and did not have bandwidth to look at a new platform. I also felt like I was consistently neglecting one of the four, but that one neglected co changed periodically. To keep bandwidth for new platforms, ideally you'd stay at 2 or 3 if they're not super active at the moment.
VP - you can maybe add one to the above, but you're still working hard. I'd say you could ideally stay at 3, but I still would not want more than 4. 5 you'd be absolutely tapped out.
I have 4 - currently statutory director of 2 and observer on other 2. Doesn't mean much difference day to day.
I could not cope with more than 4.
Really depends if its buy and build vs. organic growth / internationalisation too.
This is MM UK.
What is the right number for doing active buy and builds? Imo it's 2 but maybe I'm not going hard enough in the paint. Beyond that and you get sloppy.
What does Audax do?
Disagree with some of the comments, but clearly it depends on the strategy. If you're in classic heavily operational MM/LMM PE (industrials, services, etc) at a sweaty firm with bad portco (add-ons, amendments/LME, random initiatives, dumb IC work, etc), then it's 2-3 for associate and 3-4 for VP max.
There's no scenario in this strategy where you're ever touching anything close to 5-6 portco, ever.
Yup exactly how I think about it (and my comment above) and you articulated it better than I did.
Way too many variables. How active is your group with respect to seeking new platforms or add-ons for your portcos? How large and sophisticated are your portcos? How deep does your fund get operationally?
Example:
- VP
- Actively seeking platforms (1-2 EOIs per month)
- Limited add-on activity
- Unsophisticated portco's
- Moderate assistance with operations (hiring initiatives, general strategic finance, financings, M&A)
- Max portco coverage (near death but generally staying smart on each): 4.
- Optimal portco coverage (balanced workload, able to produce high quality analyses/insights within a reasonable turnaround): 2.
Operationally intensive buy and build of extremely unsophisticated companies. 5-10 add ons per platform per year. 3 person deal teams. Opaque, uninvolved IC.
Max of 2, right?
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