MM Firms That Are Not JAMMBOs?
Have heard the term JAMMBO (Just Another Middle Market Buy-Out) thrown around a decent amount.
Curious to hear what MM firms you think stand out of the bunch (i.e., you would be excited to start your career at).
Currently in banking and thinking of making the jump to MM, but concerned about market dynamics.
The thing that's tough is that the "stars" really rapidly went into UMM territory. Of these, some (Veritas) look better positioned than others (Clearlake, Platinum) to stick there.
The thing with JAMMBOs is that there are just so damn many 1-5 bn funds, all of which are going to have trouble raising relative to the blue chips regardless of whether Fund I did well. It's going to be hard to get insight on, idk, the Monomoy Sweet Spot versus Cove Hill versus BayPine versus whatever. Maybe there's some idiosyncratic edges, like with Patient Square / Momtazee. And any of the almost-1-bn funds trying to enter this category are going to have difficulty too. Add in all the 5-ish Euro players and there's just not that much differentiation
Are you saying that Monomoy, Cove, and Baypine are differentiated?
Or were those just examples of funds (out of many) that don’t stand out?
Latter. It's not that they don't "stand out" per se; they all have some kind of differentiation / focus. But nothing so spectacular that they're not swept in with all the other JAMMBOs. It's like, yeah, a D-End stands out because he's large and a WR stands out because he's fast but both are JAGs if they play for the Lions most likely.
Idk man I feel like I’d pretty pumped to start my career at Cove Hill lol
How so? Interested in tech PE so would love to hear more.
I mean, as an associate, sure? B-school's probably going to be Bain-y. WLB doesn't matter that much as an ASO candidly and culture is iffy but whatever, it's two years.
It's not quite the potential "inflection point" fund now given sector focus that you'd look to be at at the senior ASO / VP level. "Opportunity for advancement" sounds like candy when you have a 2bn fund growing to idk 5, but if they're going to stall out a bit on the next fundraise and going to be challenged for a while, I don't see any differentiation there relative to the other MM's and the tech exposure might actually be a bad thing. But who knows, maybe they pull through better than others and I'm an idiot
What's special about Cove Hill?
IMO, generalist funds are going to struggle the most. You need deep, long-standing network relationships and access to niche operating knowledge in 1-2 very specific industries to really deliver alpha in PE now. Financial engineering is a commodity, and has increasingly been competed away with the industry’s expansion. The average joe “consumer, industrials, business services” fund is a tougher putt than one solely focused on let’s say healthcare / med (e.g., Patient Square with MD/PhDs on staff) or energy, infra, etc.
MM PE returns will never be as great as the glory days (80s - early 2000s), but these specialist groups, I think, have the best shot at outperformance (and therefore raising successive vehicles)…
I'm in a leading generalist fund now
specialised funds have the issue of:
1) they may be forced to buy crap - limited universe, numerous secondaries
2) they may be forced to buy at high prices (e.g. healthcare now)
In general, hard to tell as it's fund specific and different LPs have different preferences - some prefer specialised funds, others generalists. Generalists market themselves as skilled investors who find potential in many niches. This is usually more sustainable than the typical buy and build in dentistry, vet clinics, CROs and CDMOs.
I find it’s really hard to generalize. A lot of the time generalist funds are regarded as the “dumb money” in processes and will miss things in diligence (or underestimate risks) that specialists would sniff out. The flip side of course is everything you noted.
Bertram is going MM. I think they will do well.
Thoughts on consumer funds like LightBay, Freeman Spogli, TZP, Garnett Station? Can’t imagine fundraising in LMM/MM consumer PE is easy moving forward.
Even the top players in this space might be eh places in the Amazon Era. Some of the sharpest fucking banking analysts I knew went to Sycamore and they haven't raised in five years and lost a founder
IMO the biggest differentiators are the really deep industry specialists (groups mentioned already like Veritas and Patient Square) or the really heavy operational groups (like a KPS and spinouts). Maybe the guys who can buy melting ice cubes and make something happen (e.g., Platinum).
If Veritas is tech and Patient Square is HC, is there a player that stands out in the space for the industrials sector? I know it’s a broad and diversified field, so interpret that however you’d like
KPS
evergreen coast, due to affiliation with elliott
Thoughts on Monomoy?
they are a definitional JAMMBO... used to do more unique deals, now it's extremely run of the mill and they lost their best operational people when middleground spun out of there
I thought they had the operational edge similar to KPS. Is that more true at Middleground now?
I think ultimately the only way to differentiate yourself in the middle market is having a large operating partner network and to likely be focusing on one or two complementary industries. These funds that are covering every industry under the sun are stretching themselves too thin in my opinion.
also, I think we see cases where funds over fundraise for their target market and now have too much capital to deploy in said industry. A fund I think that has curbed that well is Vector that has remained disciplined on fund size despite likely having the ability to raise significantly more capital.
Thoughts on Audax?
Sweatshop
Dolorem deleniti adipisci reprehenderit pariatur odit vel. Consequatur ullam accusantium et porro corporis natus pariatur ut. Id ex placeat ut qui expedita sit. Tempora velit consequatur aperiam accusantium optio. Natus autem vitae dolore nihil et. In ratione aperiam ullam voluptatem neque voluptas nihil corrupti.
Et harum sequi officiis. Aliquam sunt odit natus architecto. Ab harum et cumque aut aut aliquid expedita. Et et aut voluptatem animi sunt et. Impedit ab corporis totam voluptatem.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...
Consectetur sequi voluptas dolorem magnam. Reiciendis quidem quibusdam saepe voluptatem necessitatibus quo autem atque. Fuga a nam autem eum aliquam. Officiis nostrum dolorem quam et est.