If you haven't read it yet, WSJ http://online.wsj.com/article/SB100014241278873244459045782840112435344… made a front page on the Silver Lake MD responsible for the Dell deal, Mr. Egon Durban.
-14 years with the company
-past Skype and WME deals
-strong relationships with MSFT execs.
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Great read, thanks. +1.
This is awesome
I was told by a Bain partner that Bain's PEG group advised heavily on this deal, but made the mistake of not co-investing--would have returned the fund and then some if they had, evidently.
The Skype deal? I didnt know the consulting firms co invest at all!
Silver lake has been a brand name historically but has had a ton of trouble fundraising recently. Fund performance has been awful
Why do you say that? As of March 31 2018's SLP V was 24.1% IRR with some markdowns coming of course and 2013's SLP IV was 26.7%. Fund VI from 2021 is $20bn which is on par with TB's increase in funding. That said, a lot of the the media and entertainment deals that have replaced software/hardware origins of the fund seem less attractive.
To be clear, I am not disagreeing and perhaps I am underestimating the multiple expansion and compression and corresponding markdowns needed from peak to trough specifically for the 2018 vintage so curious if you could elaborate here?
Can confirm silver lake has not marked things properly internally given no public marks for a lot of their recent equity investments. Absolute goose eggs on a number of them
Any additional insights into SL's performance relative to other large tech buyout firms? Feel like performance should be viewed with the Vista and Thoma Bravos of the world in mind given the current interest rate environment.
Vista and Thoma are more traditional B2B SaaS focused, but also are much more aggressive with regards to leverage. So I think they would take a bigger hit going forward with current rates. Not sure on how they compare wrt performance
Hmmm wondering the context on the fundraising troubles, I heard from a friend they already have $16B committed to their next fund and are hoping to close around $20B by end of year.
On a relative basis, I don't think this is true. Please inform me where you are deriving this "awful performance" from?
You've probably answered your own question. March 2018 is very different from November 2022. They have more public exposure than most funds + index on tech / high growth.
Seems like they were say as of March 31 (2022) the 2018 vintage's IRR was… not as of March 31 2018, or am i wrong? This would only be ~8 months for mark downs then
The public exposure is convertible debt for the most part, so I'm assuming that is not as significant of a markdown compared to equity.
Silver Lake has had a lot of strategy drift in Funds V and VI from earlier funds. While at least 50% of their deals used to be buyouts and structured equity represented a large portion of the balance, recent deals have been far more likely to be minority growth deals without much in the way of structure, and buyouts have only been about ~15% on a capital-weighted basis. If they're having trouble raising SLP VII right now, that's a big part of why.
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