MMs and UMMs that aren't JAMMBO's

Hey all - incoming analyst at a BB. I'm interested in going through on-cycle, and through researching the PE universe and my HH I've realized that I'm definitely more interested in the UMM / MM space. With the proliferation of LP capital over the past decade, it seems like the MM space is pretty crowded, with a lot of MM funds having relatively generic and undifferentiated approaches to investing (buy-and-build + "operational improvements" to realize synergies + hoping to exit with multiple expansion). If anyone would be able to provide insight into some of the more differentiated MMs / UMMs that aren't JAMMBOs, that would be greatly appreciated! 

 
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Some firms that I think fit your criteria:

Differentiated Investment Strategy

  • KPS - deep value investing focused on turnaround buyouts (buying distressed or stressed companies and doing some pretty heavy operational work), also would consider them industry-differentiated (the people there are very smart on the industrials space)
  • H.I.G. - probably the largest industry-generalist value investor in the MM space (focused on buying underperforming companies or carving out an unloved segment of a business for cheap and helping improve / change the direction of the asset); another fund that would fall into this category would be One Rock
  • Centerbridge - value investing in both traditional buyouts and credit (special situations), one of the few places where you can get such a wide breadth of experience investing all across the capital structure

Industry Specialty

  • Veritas - they've scaled so quickly it's hard to consider them even UMM anymore with the check sizes they write these days, but they're the experts in investing in government-tangential industries. Focus on A&D, government services and healthcare IT, with truly deep expertise in the space (the managing partner and a handful of others at the firm have TS clearances). A similar name in this space would be ACP
  • Patient Square - HC-focused firm that's pretty new but has assembled an impressive investment team + operational team (MD/PhDs on staff)
  • Arcline / Greenbriar - A&D-focused firms that pride themselves on being the subject matter experts on A&D; as a result, they've dared to bid top-dollar on assets with the spin that they can find value where no other investor can because they understand the industry so well. Time will tell if that's actually true
  • Searchlight - technically generalist but they play a lot in the TMT space, specifically the telecom and telecom infrastructure space
  • Tech PE is a crowded field but there are some standouts in the UMM / MM space who have sector expertise
 

Good comment but definitely would not recommend Centerbridge to anyone in 2024...declining fund 

 

That's fair. Nowadays PE associate opportunities should be evaluated through the 2-and-out lens given how few firms are actually able to consistently promote internally...

 

Would also add, something to be aware of during your recruiting process / research is whether a firm is actually differentiated in their industry (in that they have industry-specific knowledge or expertise that truly sets them apart from the field) or investment strategy. Over the past few years, LPs have become more cautious on generalist investors and have shown a preference for industry-specific funds. As a result, a lot of funds have pivoted to market that they are industry specialists. A prime example of this is THL (no hate on the firm though); THL's marketing spiel to LPs is that they're specialists in the intersection of technology and other industries (hence why their three main verticals are all technology + (insert industry)), and they've also raised an Automation fund marketed on automation + other industries. Based on their last fundraise, LPs clearly loved the message, and THL's a great fund, but I don't think most people in PE consider them as differentiated technology specialists. Another example is all of the new C&R and services spinouts (Percheron, LightBay) that are in reality just the average JAMMBO focusing on roll-ups.

 

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