Thoughts on Thoma Bravo, TPG Tech (buyout platform not growth), Silver Lake, Welsh Carson, KKR TMT, Vista, H&F, and other MF/UMM tech PE funds? Incoming analyst thinking about tech pe at these firms and others. thoughts on culture, associate experience, info on investment style, and interview would be helpful, especially for Thoma Bravo and TPG tech team.
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All top shops, obviously. I would put Vista/SL/Thoma on a tier above the others for tech though
following
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NGT is a glorified sourcing shop. Not even one of the top growth equity firms either, as discussed in one of the other threads
Care to add more color on NGT? or point me to the other thread discussing it?
Disclaimer - info may be a bit dated (as it's been a few years since I've had recruiting conversations with these groups)
TPG's tech investing efforts are mostly run out of Capital, with the exception of MM buyouts. Growth equity investments, while invested out of the Growth fund, are often sourced and reviewed by the Capital team. TPG has a mixed reputation on the street though - I've heard many regard them as a bit undisciplined, and some of the valuations that they underwrite (especially on growth deals) are a bit irresponsible (including ones they've done recently). Not sure about their culture.
Silver Lake has strayed from its roots - away from pure technology buyouts/control deals and more into growth equity transactions and the broader TMT space. Still an incredibly smart group of people though. They work hard but generally have a reputation for paying well and maintaining a good culture. Also one of the few PE firms out there that will promote internally all the way to the top. Not sure how performance looks nowadays though.
KKR NGT is a sourcing shop in my view. Not particularly strong, not weak, interested in the TCV/Summit/TA approach of cold calling and finding profitable "high-growth" software companies to invest in. With regards to their core PE platform - I don't recall any tech deals they've done recently.
Advent is someone you should add to your list. They just hired one of the former heads of TPG's tech team to lead their new technology investment efforts (minority and control) - they seem very focused on building out their TMT business and could be an exciting place to go.
I tend to lump Vista and Thoma together. Software-focused obviously, willing to pay premium multiples for premium businesses. I've heard mixed things about bureaucracy and culture at Vista (mostly skewing negative), but you can't argue with their historical returns. I'd be skeptical that their returns will remain strong moving forward, as they're raising massive funds and investing at extremely rich multiples.
No thoughts on the other funds you've listed.
I also haven't seen a lot of technology buyouts recently, probably due to the expensive nature of the space. A lot of these firms have moved toward minority stakes as it's easier to raise and deploy capital in growth-stage companies at the moment. To be honest however, I generally do not follow the tech LBO space so I'd love to hear any opinions to the contrary.
Yea just to add to this, I think the absolute dominance of Vista/Thoma should not be understated. Folks should realize these two are raising 14-16bn funds each for software PE only. Think about that vs a KKR who raised idk ~14bn for us PE all sectors. I.e. thoma/vista together have been like half of the enterprise software buyout market in the last few years. Thoma/Vista known to be cost cutters and heavy on management changes. Creates an angle for folks to pitch themselves as "friendlier" but at the end of the day, the ability to pay up is tough to beat.
Would add Permira to the above list as a top player (menlo office).
Thanks for this info. What do you think of General Atlantic?
Recent tech deals for the core PE group at KKR include Corel and Compuware
how would you compare Vista / Thoma to up and running folks like Siris?
following - as a follow-up related question, are there any websites/resources people here would recommend to keep up with tech PE details?
Interested
This is my segmentation of the landscape:
(1) Pure-play large-cap tech LBO funds: Vista, Thoma, Silver Lake • Vista and Thoma are more growth-y, pure software-focused, mostly majority recap firms and essentially pioneered SaaS LBOs. Silver Lake has a much wider mandate in terms of industry (e.g. Endeavor the talent agency and sports clubs, which Vista and Thoma are unlikely to touch) and structure (lots of minority growth rounds e.g. recently COVID-related PIPEs/minority rounds in Expedia, Twitter, Airbnb). • Vista and Thoma have a shorter track record but exceptional returns. Silver Lake has a longer track record and really strong returns (still) but returns have been lower than the Vista/Thoma SaaS train recently. • (since OP asked) Thoma is very focused on B2B enterprise software, with a $1-2bn TEV sweetspot so there is some room for growth in their companies. Subfocus is on complex bac-end – niche security, application and infrastructure systems that other PE firms may not understand. Regarding process, they’ve launched the on-cycle for 2 years so extremely competitive.
(2) Generalist large-cap LBO funds with large tech focus: H&F, Advent, Warburg Pincus, Permira (and to a lesser extent, TPG, Bain Cap, EQT, Apax etc.) • You'll find H&F, Advent and Permira in many of the auctions with Vista/Thoma. • TPG’s Collabnet acquisition was very Thoma-like so they may do more tech LBOs but for now, haven’t seen them do as many.
(3) Pure-play large-cap tech growth equity funds: Insight, General Atlantic, TA Associates, Summit, KKR NGT, Blackstone/Providence/TPG "Growth", Bain Cap/Advent/Permira/Apax/CVC "Tech Opps" (separate funds from LBO arm) (and Warburg because they do a lot of growth equity from their man fund)
(4) Pure-play mid-cap tech LBO funds: Francisco, Marlin, Siris, Hg, Clearlake etc. (this is a long list..)
(5) Generalist mid-cap LBO funds with large tech focus: Welsh Carson (since OP mentioned: primarily healthcare focused; technology is secondary), Veritas, Genstar, New Mountain etc. (this is a long list..)
Thoughts on TCV and AKKR?
TCV has an excellent reputation for doing tech well. They touch a lot of consumer internet businesses that traditional PE firms focused on enterprise B2B software may not. In that sense, they are a bit of a venture-capital-growth hybrid fund. E.g. they invested in Airbnb and Bytedance (more VC/growth-like) but also Genesys and Travelport (more PE-like). They have been very disciplined investors with no sudden massive fund increases (I suspect this is deliberate). Their recent 10th fund was $3bn vs. the previous one at $2.5bn. Overall impressive long track record.
AKKR: have heard they have done well for themselves, with very strong recent fund returns. (As of June 2019), their 2013 Fund IV was running at a ~35% IRR (North Carolina pension). They tend to do some very small deals and seem to find many high-quality but subscale/underappreciated B2B enterprise software businesses (good rep in vertical software and payments). Goldman took a stake in AKKR in 2017, which is a vote of confidence. But their track record is a little shorter and their (admittedly major) success seems to be pretty recent.
OP here. great breakdown of funds and useful info, so tyvm for that. would you have any info on culture for funds in the first two groups?
Not too much more than what is already in this post / elsewhere on WSO.
(1) Silver Lake: very technical and sharp place - values intelligence and hard work. Some internal promotions. Have been very opportunistic recently so quite an exciting place to be.
Vista: (from elsewhere on WSO): culture isn't the best, with some politics and disliked senior team members/VPs.
(2) H&F is probably the most intense firm on this list. Very intellectual place (attracts debate team members) that does a few concentrated investments per year. Lots of hard work, long weekends but high compensation.
Advent/Permira are similar - intellectual places with sharp industry knowledge and a strategic/growth-mindset. Less intense than H&F. Much more international than any other firms on this list - so exposure to global teams/thinking and some interesting off-sites in Europe etc.
WP: increasingly a growth equity rather than LBO fund.. which may mean hours have become better.
Any insight on bain tech opps? Just launched a couple years ago right?
Much too soon to assess. They've done two investments, it seems? A Cloud Guru and Hudl. Part of Bain Cap's strategy to expand into many new domains - Life Sciences, Public Investing, Tech - as the original buyout strategy has become less important to them / hasn't done as well. Not sure if they've even finished raising the $1bn (raising since March '19?). They say it is a mix of middle market buyout and minority growth equity in tech, which is probably a good place to be for returns. Current investments look like they're both minority/growth.
Thanks for this, super helpful. Would you mind listing out a few more Pure-play mid-cap tech LBO funds?
Some more off the top of my head: Vector Capital, Symphony Technology Group, GI Partners, Accel-KKR.
Smaller: Banneker (ex-Vista), Sumeru (ex-Silver Lake), Riverwood, Leeds (edtech).
H&F? Didn't they just do an elevator deal with CPP and Blackstone and still lose out to Cinven / Advent? Also just looking at the folks they recruit I think they are very generalist and industry agonistic
They are generalist but with a large tech focus. At the very least, tech-enabled services in non-pure-technology sectors, which is many "technology" companies. The best way to look at it is the proportion of equity they dedicate from their main fund to technology or tech-enabled vs. other investments. Most substantial is their investment in Ultimate Software ($11bn) and subsequent merger with Kronos (Human Capital Management SaaS). Their recent recap of Checkmarx is also a classic growth-y software deal. Other technology-oriented investments: Applied (insuretech), AutoScout24 (digital marketplaces), Change Healthcare (healthtech), Genesys (cloud software/services), Nets (payments)... In the past: Ellucian (edtech), Renaissance (edtech), Vertafore (insuretech) ... Not all technology investments look and smell like pure SaaS software - but I know all of these (and more) have a strong technology angle.
Thoughts on Thoma Bravo explore fund (new $1.1bn fund)?
following
Great thread.
Can someone comment on how a TMT associate role might differ between the tech-focused funds and, say, the tech group of a more generalist private equity fund such as Carlyle, KKR, WP, Apollo, BX etc? What would be the advantages and disadvantages of both?
The latter will probably actually feel much smaller, even though you’re at a “megafund”. If you only work with the people at these firms who focus on tech investments, that’s a much smaller group than a Thoma or a SLP
Also possible that at a Vista/Thoma/SLP, you may be assigned to a tech subsector such as enterprise B2B, HCIT, consumer internet etc. At a more generalist place, the teams are smaller so that is less likely to happen and you will be moved around depending on what deals are going on.
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