Second-tier PE funds
If we consider the top tier PE funds (and ultimate career goal) to be the megafunds (i.e. KKR, Blackstone, TPG, Carlyle, etc.) then what's the following tranche? Which funds are good as an inbetween stepping stone from IB to mega-PE/B-school for pre-MBA's?
I currently work at a top I-bank as a 2nd year analyst in one of the industry coverage teams. Given that transitioning directly into a megafund won't be easy (for anyone), what PE funds are considered to be the most reputable thereafter? I'm guessing it's a string of mid-market funds, but which ones? A top 10 list would be good but any advice is appreciated.
If the Tier 1 funds are all the megafunds listed above, then Tier 2 would be the top middle market players in the likes of Madison Dearborn, New Mountain, Berkshire Partners, Golden Gate Cap, etc. Depending on the coverage team you're in, you could also look at some of the more industry-specific PE shops like JC Flowers or SL Sumeru.
Exactly. Top niche players could almost be considered as a separate subset of Tier 1, if one defines tier status not primarily by fund size but rather by reputation. If you're interested in tech PE, for example, check out Silver Lake Partners. Or for media and entertainment, look at Providence Equity. Those are just two examples of highly-regarded niche PE shops.
not sure all tier 1 players / megafunds of circa 2007 will still be tier 1 / megafunds when the dust settles, and all that ranking stuff is a bit meaningless. high-flyers like bain are hemmoraging, and funds who looked top tier for a while like permira are going back to 3rd tier if they manage to survive at all. if mega-buyouts are gone for the next 10 years, who cares you have a 20B fund, we are all gonna be mid-market.
bottom line, do your individual DD rather than rely on rep. Not sure for instance how Silverlake, which was mentioned above by someone, will do given the whole "tech has matured and become less cyclical hence leverageable" thesis has been proven dead wrong and i think there is a chance tech buyouts will disappear for good...
This.
I would be careful to assume that top tier funds are the "ultimate career goal". There are lots of people that purposely move downstream from the megafunds (or avoid them altogether in the first place) to achieve a more healthy work/life balance. For many a 9-7, high-performing, $1B middle market firm is the ultimate career goal.
Agree with this 100%
Yea it is.
Completely agree. I'm starting a career-track this summer at a $1bn MM firm and I wouldn't give it up one second for a spot at the firms being named 1st/2nd tier in this thread. It feels excellent to know I'm not forced to do b-school if I perform well. Also feels good to know my work/life balance will improve.
Did you work at a BB prior to the transition? Coverage or product group?
would add a top niche player category to the list. also fast growing, top returning funds are likely to be better careers long term. you want to join the next KKR not be employee #500 at KKR.
Would add Marlin to the list of top niche / up and coming PE shops. they invest mostly in software/tech but also in services, industrials, consumer. Think of cross between Vista and Gores (several ex heads of Gores are at Marlin now). Understand Marlin has tier 1 returns and is growing very fast which is a major positive (look at AUM trajectory of last 5 funds). They also have a flexible mandate so they compete against top growth equity funds, midmarket funds, turnaround funds depending on the type of deal, but they are also competing against the big names e.g. Advent, KKR in the upper mid market. Will be interesting to see what happens - the next fund could be $3bn-$5bn if they continue to perform as historically. Based on their website, they're also attracting ex bankers from top firms/schools e.g. wharton, yale, / GS, MS, HL, etc. They also have a highly operational focus like Vista.
Bro, by several do you mean 1? One one dude on Marlin's investment professional team is from Gores...
Assuming you work less hours at a $1B MM firm versus the typical top-tier firm, how does compensation compare?
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