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Culture is okay. Look at the types of deals they work on and you can understand that it isn't easy work. Top decile returns. Flagship fund will look at anything from $500M-$5B so there is a broad range. Look at RSA or Fireye. They have a lower middle market fund too. Associates work and get solid exposure but the wlb seems slightly better than comparable buyout funds... sometimes. Deals can get hairy with a lot of looks at carve outs and other complex deal strategies. Internal promote culture with virtually nobody going to get their MBA after associate. Comp is on par with most MM funds. Co-invest available as an associate. Software focused, value investors. All majority deals
top quartile consistently
Technical interview process too, but it definitely goes to show of the caliber of individuals they’re looking for
Culture has improved over last few years but is still no walk in the park given the type of deals they work on. People are super sharp. WLB better than most MM funds, pay on par. Heard VP comp is above avg but good VPs get grinded.
Bumping the thread
Any reason why they rarely get mentioned given that they recently raised a pretty big $4bn+ fund? How does it compare to other bay area firms like Genstar, Francisco, Arcline, Golden Gate, GI etc. in terms of exit, comp, returns?
Very solid software fund that gets added to the buyer's list of every value-based software play – they just purchased Wrike from Vista & Elliot. Don't think they're mentioned often since they weren't really prevalent until 2017 when they institutionalized their fund (was previously a family office that didn't open up to other investors). Since opening up to new investors, they've doubled fund size every fundraise. Wouldn't be surprised if they doubled their fund size in the next 3 - 5 years given that it's great to be a value investor in this environment. Don't really know what MoMs or IRRs they're posting but likely very solid given their track record since 2017. Currently seeing them in the mix for a good amount of sell-side mandates between $500mm - $2bn.
How has their fund performed recently? Know they raised a ~$4bn fund last year but any idea what historic returns have been like or where to find them?
Bump
They have multiple top quartile/decile funds in a row. Their performance is quite literally top tier in every sense and they'll continue to kill it with fundraising as a result.
Thanks I appreciate it, what is comp like? I've seen it thrown around that it's "in line with other MM", but with solid returns, larger fund sizes, and larger deals it look like they're doing larger deals so is comp moving towards more in line with UMM shops?
Where are you seeing the fund returns? I wasn't able to find it online
Publicly you can find info from LP presentations. I do know that a buddy of mine went to their info session last year and they claim that on average they get a 4x MOIC at exit per portco. Recent funds look like 2020, 2021, and 2023, so IRR/MoM figures may look a little weird given the current landscape across all funds raised at those times
bump? curious to hear if there are any material numbers for comp as an associate, what culture is like, benefits, wfh policies?
seems like there was a bit of a culture issue per some old threads and curious to hear if this has been improved in any sense.
Bump
Phenomenal returns and very sharp people. Would honestly love to be there, seems like the ideal spot: growing funds with great returns = room for promotion as the firm grows. However, am signed up for an MF during on-cycle and didn't realize how bureaucratic the MFs are. STG seems like a phenomenal tech seat though, and the people there by all accounts are solid and very sharp. They also do value software investing for which clearly they have some actual value to add given all their funds have been top quartile returns and their fund sizes seemingly double for every new fund. It's a rocket ship and joining it as an associate is a great place to have a career at/grow at as the firm grows.
100% agree. STG is a great shop and very underrated.
For what it’s worth I’ve heard iffy things about culture (both here and from formers) but would be great if someone could confirm.
Buddy of mine went deep in their process, and from what he told me, it sounded like the culture was above average. 3 day a week in office (most of the team lives in SF), Partners sign-off working on weekends, every interviewer, coffee chat, and senior person harped on creating a place people want to stay at. Did on-cycle same time as he did and it sounded like all of his interviewers and coffee chats (despite their pretty technical process) were all down to earth, smart people.
Now, I’m sure that hours and pressure ramp up during live deals, but from what I’ve heard of their diligence process and complexity of deals, it makes sense. Associates carry a bigger load on deals, but I wouldn’t say this is a knock on their culture.
Are returns still holding up? Saw their 2 biggest investments (Trellix, RSA) have 1st lien debt trading at deeply distressed levels.
Yes, almost all 1st lien tech PE debt is trading at distressed levels. The proof is in the pudding in terms of returns as they have just raised a fund just last year October that was $1.2B oversubscribed(they raised $4.2B while originally planning to raise $3B). So either they are the world's greatest salespeople and LPs that invested with them are stupid OR the more reasonable conclusion... which is that a lot of tech names have 1st lien debt trading at distressed levels. Also of note, basically every tech fund including the large ones like TB and Vista is facing a similar problem and is also fundraising just fine, it isn't a problem if you look at it from an industry perspective.
Edit: Also want to note how crazy good that fundraising record is: the $1.2B oversubscribed in 6 months is over a 3rd oversubscribed of their original ask, LP's must've loved them for them to raise that much in this tough fundraising environment. Fundraising times in this environment are looking more like 12-18 months for others, but they did it in 6 and had a hugely oversubscribed fund. It doesn't matter what the debt levels show if your LPs love you that much more than the rest right now.
“A lot of tech names have 1st lien debt trading at distressed levels.” That is not true. Completely false. Stg has had horrible results with their publicly syndicated tech buyout deals - RSA and McAfee Enterprise most recently. Good luck to them trying to syndicate any debt financing in the public markets going forward…
First, yes the above is true. SLP had two portcos file for bankruptcy this year (Byju’s, Thrasio), Vista and Pluralsight has been a shitshow, and Dynata (HGGC) and ConvergeOne (CVC) have also filed for bankruptcy. And that’s just the first few months of this year. The problems are not unique to just these firms, but a problem across the board. What do you think happens after 2021 when a giant peak in activity, valuations, and demand for deals proceeds a 5.25% rate increase?
Second (and just to clarify, RSA is owned by both STG and Clearlake), RSA divested two assets where at least one of the two went to paydown and manage their debt levels. In doing so, they not only brought their first-lien below their net leverage multiple, but they also attempted to (idk if it actually happen bc at the time lenders were talking about preventing this) distribute dividends to their LPs and injected cash on the balance sheet to improve their liquidity. And this was just the sale of Archer (link: https://www.prnewswire.com/news-releases/rsa-and-its-first-lien-lenders…) So, unless this was a sham, it seemed that this single deal alone significantly improved RSA.
As for McAfee (Trellix), they’re not in a great situation and we’ll see how it turns out as the year comes to an end, but given that not only both RSA and McAfee were carveouts, which take a bit of time to operationally restructure, but they also integrated FireEye into McAfee which I’m sure adds a ton of other complexities. It should be noted that entry multiple based on revenue compared to competitors at the time was WAY below the mean (around 3x, $4bil purchase price doing $1.3bil in revenue). Even if you disagree with using EV/Revenue, a ton of investments in 2021 were EBITDA negative (hell TPG bought Forcepoint for roughly 6x revenue in late 2023). Lastly, for a cybersecurity company they have some damn good aspects of their financials (mid-high 20% EBITDA margins, 96% customer retention). The biggest concern they’re facing has been related to revenue declines during 2023, stemming from some macro factors as well as longer sales cycles. No surprise. Enterprises were not spending near the amount they were spending in 2020-early 2022. Again, I do think many of these problems are not just unique to Trellix, but obviously declines in revenue are concerning (financial info found on S&P).
Unless I’m missing something specific to your “publicly syndicated debt financing in public markets” note (trading significantly lower than most other deals), then I can’t see how this is “not true. Completely false”
Prospect beat me to the punch here, but agree here. I would echo these points. Their struggles are certainly not unique to them right now and their history/fundraising record speaks for themselves. They remain a top-tier seat to be in just by top-quartile historic returns + massive growths in fund size with oversubscribed funds. Also for what it's worth,
Such an embarrassingly ignorant comment he had to contact WSO to have his account completely deleted lmao
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