Pick a Path: VP

Was at MF as an associate, now at #2 that you describe and enjoying it but probably end up at #3 by the time (if) I make it to MD 

I think you're looking at it the right way.  The nuance is how crowded each is; if you joined EQT a couple years ago for example, even though it's MF size they were really building out US presence so a lot of runway to get promoted.  On the flip side, there are MM funds (e.g. Kelso) that are super crowded and it'll take a ton of growth for there to be new partner slots opening up (if ever).  Something to keep in mind in addition to everything you listed.

In addition to looking for lean shops, you also need to find a place with hungry young-ish partners who are motivated to grow the pie rather than a less driven group of partners in their 60s who are trying to coast.  The latter can be very hard to move up and may need to be resuscitated when or if a position does open.

I’d pick either #1 or #3 - and extend #3s lower band down. #2 is a bit insidious. You have scale and likely a strong brand but it is not as good as the other options for career progression. This space is so so crowded… you have many other MM funds and also sub-strats of MF trying to grow AUM by targeting MM. There are naturally less assets to chase than in bucket #3 because you need to deploy $100m-$400m checks and every process is “fully-banked” (i.e., bankers calling 50+ other PE shops that all can move as quickly as you). These firms also often have bloated mid-levels and seniors that do not want to usher in next-gen of leadership / have never done that before. 

Echo the above commenter that if you're looking for the best mix of promotion runway, cash comp, and exit opps, the ideal spot could be a scaled, brand-name European PE firm looking to aggressively grow their US presence, much like Permira / EQT back in the 2010s. Some examples that come to mind at the $10Bn+ latest fund size level are Hg and Nordic Capital. 

This comment below from another thread gives a decent breakdown of the best risk-adjusted career PE seats, albiet focused on the associate level not the VP level. Sweet spot in the current market seems to be large UMMs in the $8-12Bn latest fund size range. 

Extremely rare to find a career-track role at a scaled player these days, but they definitely exist. Below are a few very distinctive buckets of firms, in order of overall attractiveness of an associate role. Notice that fund size and promotion runway isn't always a linear correlation: some of the larger UMMs in the $8-12Bn latest fund size range have actually greater chances of promotion than the smaller MM PE firms in the $2-5Bn fund size range.

• Large UMMs ($8-12Bn latest fund): GTCR, Hg Capital, Nordic Capital, Veritas

Note that none of the above funds are "new" by any means as they were all founded 30+ years ago, so they all have lived through many market scenarios, are cycle-tested and trusted by LPs even in the current environment. However, they've had a lot of success as of late when it comes to scaling fund sizes, and still have a ton of room for growth. Have heard that GTCR and Veritas usually push associates out after 2 years though, so maybe not good examples at the associate level. Hg and Nordic Capital are on missions to further expand their US presence, which when compounded with growing fund sizes should mean plenty of promotion upside for associates.

• Smaller UMMs ($5-8Bn fund): Berkshire, THLee, Ares, L Catterton

Fund size growth for many of these smaller UMMs have stagnated, and growth runway is limited compared to the above bucket due to (1) less scalable strategies (2) less differentiation (3) less stellar returns. As such, associate roles at these places are usually 2 years and out. 

On the scalability of strategies point, one key aspect that differentiates the larger UMMs bucket from the smaller UMMs is the track-record and ability to play in the mega-cap space ($5Bn+ TEV deals). Similar to the names in the bucket below (MM PE), these smaller UMMs have likely missed the window of achieving fund size escape velocity, and won't have the ability to grow upmarket like the firms in the first bucket.

• MM PE ($2-5Bn fund): Lindsay Goldberg, Centerbridge, AEA, Kohlberg, Cerberus, WCAS, GI Partners, Audax, HIG

Mixed bag here with some historically "reputable" firms having outdated perceptions - e.g. the likes of Centerbridge and Cerberus struggling with fundraising and declining fund sizes. Similarly, have heard of multiple underperforming portcos under GI Partners and WCAS, with GI struggling to fundraise recently. WCAS's fund size trajectory has stalled / declined since their 1998 fund vintage (inflation-adjusted) due to inconsistent returns; their 2022 fund is marked at a -9.9% IRR though might be a bit early to tell. Audax and HIG have grown but the strategy of buying a high volume of small companies might not scale well, so fund sizes might stagnate going forward.

• Dying funds / former UMMs: American Securities, Providence Equity, Clearlake, BC Partners, MDP

Nothing much to say here as many on this forum are probably well-aware, avoid at all costs. 

Sir this is a Wendy’s 

YOU ARE SUPPOSED TO THINK DIFFERENTLY IN PE FFS THINK FOR YOURSELF! NOT mArKeT sEnTiMeNt ON ANONYMOUS BOARDS!!!