I've seen more and more micro firms turn to this instead of the classic PE flip in 5-7 yrs model.
Anyone do this type of investing either solo or in a group? How are returns as compared to the traditional PE structure?
| +43 | Is Joining PE still worth it? | 23 | 6h |
| +29 | Negotiating title for VP role? | 21 | 20h |
| +21 | How to explain short stint on resume | 3 | 2d |
| +17 | Being honest in Interviews? | 1 | 4d |
| +16 | What’s one number you wish sellers disclosed before you spent time on a deal? | 3 | 22h |
| +14 | Choose UMM PE or AI Corpdev role | 4 | 3d |
| +13 | Are industry conferences worth it for proprietary deal sourcing? | 4 | 12h |
| +11 | Secondaries Exit Opportunities | 2 | 6d |
| +11 | Business class flight tickets standard? | 7 | 1d |
| +11 | JPM Morgan Private Capital vs. Mid-Tier IB | 7 | 15h |
Career Resources
Get instant access to lessons taught by experienced private equity pros and bulge bracket investment bankers including financial statement modeling, DCF, M&A, LBO, Comps and Excel Modeling.
I had this discussion with my cofounder a few months ago. Here is my word vomit take...
Neither of us personally see the point in selling assets unless we're offered a price far above market because debt is so cheap right now. Look at the delta between selling a portfolio company and a dividend recap...usually not worth selling if CAGR is good plus finding great places to park money is very hard right now. There are very few good deals floating around and given our focus on turnarounds, cash isn't really a problem as the assets we usually look at are relatively cheap b/c they are distressed.
The other point that's probably more applicable in traditional PE is that you end up doing a lot of objectively stupid shit to make fundraising easier. For example, selling a position early so you can post attractive IRR means changing the business you're invested in to focus on short term wins near the end of the fund's life.
Some cool dynamics with an evergreen/permanent fund too...
For example you can lever the portfolio to acquire new assets or provide portfolio companies with capital for growth. This obv means a much better interest rate as DSR looks way way way better.
So my question is this then. In a forever hold type of situation, are you basically paying investors a dividend?
Velit omnis est dicta et quasi magnam qui asperiores. Et nulla est consectetur incidunt itaque aut dolor eligendi. Rem nemo libero deleniti in nostrum. Iure nihil deserunt soluta beatae blanditiis cum dolorem suscipit. Repellat qui inventore amet consequatur sed aut totam. Qui possimus cumque pariatur tempora et quo voluptatibus. Tempore ut ut corporis aut tempora totam.
Vero temporibus sint necessitatibus hic sint. Quis ab animi exercitationem et distinctio quia. Quibusdam qui dolores rem et numquam sapiente nemo ex. Voluptatibus nihil nisi omnis nulla harum.
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...