How to Know What “Type” of Fund to Target?
Seen advice heading into PE recruiting for incoming AN1s along the lines of “know what type of fund you’re targeting and communicate that to HHs.” What does this mean exactly beyond the MF/UMM/MM and geographic categories that are referenced on WSO?
When people advise "knowing what type of fund you're targeting," it goes beyond just the size categories like Mega Funds (MF), Upper Middle Market (UMM), or Middle Market (MM), and geographic preferences. Based on the most helpful WSO content, here’s a breakdown of what this advice entails:
Investment Strategy:
Funds differ in their investment focus. For example:
Sector Focus:
Some funds specialize in specific industries, such as technology, healthcare, consumer goods, or industrials. Knowing your interest or expertise in a particular sector can help you target funds that align with your background or passion.
Stage of Investment:
Funds may focus on companies at different stages of maturity:
Geographic Focus:
While you mentioned geography, it’s worth noting that some funds have a global focus, while others concentrate on specific regions or countries.
Fund Culture and Style:
Fund Size and Deal Size:
Specialized Strategies:
Some funds have unique strategies, such as:
By understanding these dimensions, you can better articulate your preferences to headhunters (HHs) and align your recruiting efforts with funds that match your career goals and interests.
Sources: Q&A: PE Secondaries Principal, Differences between Co-invest and Secondaries?, https://www.wallstreetoasis.com/forums/the-only-post-about-active-investing-you-will-ever-need-to-read?customgpt=1, Q&A: PE Secondaries Principal
Mainly Financial engineering, involved with Operations, growth equity, career track, two year program…
(Optional) Specific fund names (based on culture, performance, network/friends, etc.)
No need to have preferences on all these. Pick like 2-3 max to avoid limiting yourself, unless you think you’re legitimately only interested in a few named funds, but that’s high risk.
Ultimately if all goes well / according to generic plan you will end up at 1 PE fund. The advice is basically saying to do the work yourself to figure out where you will be most productive, where the fund will like you the most and you will do a good job and build a great career or career launching point.
Study the funds. Figure out their strategy. Learn about their people. The fund trajectory. Firm history. Port CO’s. Industry specializations. Past investment wins and losses. Etc. Know as much as you can and be as most prepared as possible to hit the ground running and be an all star associate.
The more you already look and act like a top bucket PE associate for fund ABC the easier it is for the HH to place you there and for the firm to hire you into that seat.
If that is what you want
Good luck
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