For those working at (non-mega fund) buyout shops, how did you wind up in your current fund and what were the range of funds you recruited for? Currently looking at middle market funds as I prep for buyside recruiting, and I want to start narrowing down my universe. What aspects of the role & (its growth potential), the firm's culture and investing style did you consider? Any other factors?
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I recently finished recruiting from a MM bank, here is roughly how I went about the process:
Determine size of investments and size of fund. Most of my experience in banking was sector-specific with companies $500m EV. I enjoyed working in this industry and saw a lot of growth / value drivers with LMM businesses. There are a ton of funds that invest in the LMM, but I wanted to join one that was at least established / reputable. That led me to target firms with fund sizes $500m - $1b.
Determine geographies you're open to. For me, this ruled out a lot of firms as I didn't want to work in NYC.
Decide if you want to go to business school. While most places still kick you out after two years, there are a growing number of firms that are open to internal promotion.
Culture. Now look at your smaller list of firms. Have you encountered any of them during your processes? Do overhear your senior bankers discussing them ever? Are they active in the marketplace and would provide you with good experience? Have the Principals / VPs been there a long time? Where did previous associates go? Any reviews on WSO or GoBuyside?
From here, you should have a much more manageable list of target firms. You can now either reach out directly, ask your senior bankers for introductions, or figure out who their recruiters are and reach out.
Would be curious to know a ballpark number for total comp and the split base/bonus assuming you stayed pretty sector-specific. In a similar situation, early days, but have been hearing that smaller firms (by total AUM) have a pretty low bar for comp which might not make it worth while compared to my current situation.
I finished PE recruiting a while ago but this is a great way to go about in (also came from MM bank)
In the end, PE recruiting is pretty tough, especially if you're very focused (i.e. want an indstrials fund in Chicago investing in 30m+ EBITDA business). I don't have much hard data to support this but I bet a vast majority of banking analysts accept the first PE offer they get (I know I did).
Thanks, Donnie. Regarding your first criteria, wouldn't $500m be considered relatively young (i.e., still establishing reputation)? If you don't mind sharing, what were some examples of more reputable firms with AUM in the $500m - $750m range? Roughly how many investments would they make per year?
Some funds choose to not raise bigger funds. It does not necessarily mean that because its 500M AUM that its young. I know lots of LPs that invest in specific fund sizes and wont follow the GP if they increase their size and start investing outside of their niche.
Its very different to be buying 50-100M EV companies vs 300M+ EV companies and its not exactly the same skill set in terms of buying process and adding value. From my experience the better GPs in sub 100M EV companies tend to have operator backgrounds (e.g. entrepreneurs that exited their biz and started a fund), as you can be much more hands on in the operations vs. financial engineering/growing through M&A. Also, there are much more proprietary deals in that bracket, which is untrue when you get to the 300M EV cos. In the latter bracket, the better GPs tend to have IB backgrounds and be very familiar with the bidding and buying process but less experienced on ops as all these companies will go through a process.
Thanks for the helpful comments. To strateyjunkie's point, probably best to position your target universe as having been thought out, but not too narrow. Follow-up question: if you worked with recruiters, how did you communicate your preferences? Was it as simple as - I am looking for lmm growth equity opportunities in {location] or were you more specific?
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