Hi,
I've seen on here a couple times that a "rough" proxy for the sweatiness of a firm is the number of port co's per analyst/associate in the firm. From your experience what is a reasonable number of port co's to be managing and from what number roughly (I know its not exact science) should alarm bells be ringing
Thanks
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This would depends heavily on the stage the companies are at. Some fundamentals have to be set right for early stage ventures, so more time on those. Once everything is in flight, the work is fairly limited with the occasional board meeting presence and ad-hod calls.
I would say 7-11 companies for me, some have more, some less. But then which industries are they in, what does the landscape look like, how long does the tech need to mature, is there a market yet, are there any external factors (inflation, war, ..) etc
Great thanks, this is helpful. May I ask what type of work you are broadly in -- VC/GE/PE ?
Was more thinking about the type of mature companies typically targeted by PE firms i.e. fairly defensible, existing market, proven tech with perhaps opportunities to expand, buy and build etc. -> mostly thinking in consumer/retail and tech
At an industry-focused LMM firm, focus on majority buyouts. Currently oversee 4 companies, about to be 5. The amount of work varies between strategy (buy and builds will be a lot of time, depending on how capable / large the team is) and how the company is doing (i.e. if your business got crushed over COVID, I will have spent a lot of time on it).
x2 depends on the stage. I have one ultra megacap portco recently acquired that I don't even go to board meetings for it's so big. I simply could not add value anywhere, it's a massive, highly functioning corporate. Then I have another relatively little one that takes up probably 50-60h per week with M&A and financings.
I could hold literally 40 of the megacap ones and be fine but having 2x of the little ones that need your attention would be enough to make me quit.
Will echo the stage point, and also add that it depends on deal team staffing and responsibilities. There’s a lot of admin work that goes into portfolio coverage. If you have a good valuations team, IR team, etc. they may take a lot of that workload, but it can also fall directly on the deal team.
If you have a deal team that’s just Partner + Associate it’s very different than having Partner + Principal + VP + Senior Associate + Associate + Analyst (not that it’s actually common to staff every level like this, but you get the point)
I’m in the mid-market, which means some of my portcos have $75M in EBITDA and full public-style support teams as we prep for IPO, and others have $10M in EBITDA (initial platform for buy-and-build) and I’m scrambling to do all the board/lender reporting and add-on deals myself since the company has no financial horsepower. To directly answer though, I have 6 and would really rather have 2-3
4 portcos that all have issues and headaches on their own.
Manage companies with EBITDA spanning from $20m all the way to $1bn. With that being said the larger ones will require fewer efforts but when things go bad (given how large the investment is) there will be a lot more scrutiny
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