What is the main competitive advantage that sector-focused PE funds ($5bb+ fund size; Thoma Bravo, Vista, L Catterton, etc) have compared to broader industry-agnostic funds (BX/KKR/Carlyle/TPG + places like Berkshire Partners, CD&R and other large funds that invest across a variety of industries)?
I might be totally off here, but I have a few theories:
- High level of experience successfully scaling companies between specific revenue levels (e.g. 500mm to 1bb) or some other metric of past success
- Tighter / warmer relationships with potential targets given size of institution (i.e. if my company partners with you, will the company be just another line on the balance sheet for you to exploit? or does your record show that you care about seeing operational success in your portco's?)
- MFs are going after different size targets entirely - I think this is probably the least likely option, especially given that massive buyouts seem to be exceedingly uncommon
For reference, I'm looking at potentially recruiting for PE at the entry-level and I want to try and wrap my head around the industry dynamics a little better. I'm not in the industry, so some of my assumptions/categories here may be flawed - no animosity intended anywhere.