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 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.
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.