Searchlight Capital 2026
Thoughts on the firm in 2026? Firm seems to have good vintages and good exposure to flexible capital mandates?
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Same as it was in the WSO that was updated half a month ago. Summary to be: value-oriented firm, good learning experience, sink-or-swim enviornment, very terrible WLB / culture with a commentor comapring it to working for Josh Harris at Apollo. As for the flexible capital piece, they very clearly have a flexible mandate just looking at deal history. Unsure on how strong firm returns are, but firm hasn't closed a new fund since 2020, which is quite worrying from the outside looking in.
They literally closed fund 4 (3.5bn) 2 years ago (check factset) And are already planning on raising again next spring
You are extremely confidently incorrect. Fund 3 was closed at 3.4bn in 2020 and they are still fundraising for Fund 4 without an official final close but a lot of the capital allocated. Pitch book is a much better resource for tracking PE and VC fund raises as it is directly tied to public filings and announcements.
what does comp look like and how does it compare to centerbridge?
probably lower than CB
what is center bridge comp? SL comp estimate?
By the way don’t be fooled by “flexible capital” mandates. While that means you can technically do a pure equity deal there is close to no chance it will happen. These funds are often sold to LPs as credit with equity returns, and the whole reason it works is because you have the majority of the ticket (50-70%) into a PIK with mininum returns / liquidation preferences / non call provisions. You then get some upside from warrants or a minority equity position
The point is, you need very specific deal dynamics (eg a founder wanting to take out some minority investors while not getting too diluted) for this to work. In normal scenario no good business will take what it’s practically 13-14% debt
What’s the drawback and benefits though of this? Seems like they have done some equity / buyouts and returns are above 20%+
The point it’s not the returns. You can make a lot of money in these deals and returns of these strategies are in line with most vanilla equity large cap buyout funds. I am actually way more bullish on these vs vanilla PE given most of these funds are generalists so you are inherently diversified and downside protected from the deal structures. But similarly you can make money doing distressed investing
The point is how you spend your days. Given the nature of the strategy you will end up spending a lot of time looking at ugly businesses or do deals that vanilla PE can’t or won’t do
Just think about it for a second, which rational person with a good business would take a 13-14% PIK mezz instrument with free warrants attached on top? It also creates immediate misalignment with management given the moment the business doesn’t do too well, the PIK keeps accruing anyway and eating way ordinary equity. So mgmt runs the MIP math and realizes that it’s worth a donut
Not to say you shouldn’t join the place, but just warning you that this is not as cool as name makes it sound and you definitely won’t wake up in the morning dreaming about giving predatory loans to entrepreneurs
If this is getting pitched as “flexible mandate” and searchlight it’s actually the opposite and you will do mostly control private equity deals (their separate credit fund is exactly that a credit fund). That being said relatively value oriented type businesses.
Agree though most funds it’s the reverse where you typically do limited control equity. Other funds that have a technical flexible mandate but do mostly control equity include Clearlake, Gamut, and SVP.
Aren’t these guys killing it? They just had a monster exit this week and their last 2 funds are top quartile
Incredibly sharp folks from the people I know there
Yeah I never get why people shat on them this much, looks like they are crushing it
How does this place stack up against KPS, SVP, and Veritas?
KPS - heard this place is very intense and thorough, and you need to be absolutely prepared going into meetings, but WLB improves as you go up, with most mid to upper levels being direct promotes.
SVP - unlike KPS, it seems like they take a lot of mid to upper level laterals, so likely a plug-and-play.
Veritas - seems like mid to upper levels are clogged, with almost no one stepping aside, but even a low mid level seat seems too valuable to lose.
I imagine you'll do decently for HFs or B-school from Searchlight and all the above?
These are very different shops.
KPS is a solid shop with strong returns but very sweaty. Great learning experience but be prepared to grind.
SVP is a special sits firm that primarily does distressed debt deals so this is not a typical PE experience and you could get pigeon-holed with limited exit options to traditional PE if you want to lateral later. Highly recommend against going there. The head guy is a dictator. The culture is not good. Tons of turnover. Internal promotes are limited.
Veritas is also a solid shop with strong returns but very sweaty. The head guy is a dictator and the culture is tough but the people are sharp and it's a good learning experience.
these are all accurate but I think a bit negative. Reality is all 3 are elite shops in the spaces they play in. Also "doing well". Anyone interested in each space would probably accept an offer at these places immediately (KPS=ind/mfg, SVP=special sits, Veritas=govt/tech services). But yes these are serious / not lifestyle places.
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