Dream PE firm?

Just for some fun and to learn about diff strategies - if you could work at any PE firm (not including the most obvious ones like BX/KKR) which would it be and why?

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Comments (81)

  • Analyst 1 in IB - Ind
Apr 1, 2021 - 4:49pm

Understand KPS, seems like a super operational heavy strategy but why CD&R?

Apr 1, 2021 - 5:26pm

My edited comment didn't work. But I meant to say early CD&R which was very operationally intensive and had an interesting dynamic. IMO much more fun to work in a PE firm when it was just booting because that's when you would be able to work with the most brilliant founders.

Old article on CD&R that goes into it:
https://hbr.org/1995/05/rehabilitating-the-leveraged-buyout

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  • Associate 2 in PE - LBOs
Apr 1, 2021 - 5:40pm

You have to ask yourself: of firms with meaningful scale, who will win in tomorrow's market?

1) Transaction focused firms are rarely able to buy at real discounts

2) Working at a buy and build firm that either uses buy and build to buy down the purchase multiple of the initial platform, or actually cobbles small businesses together to create platforms for larger buyers, would be hell

3) Operationally focused firms have less juice to squeeze given every company now has a Harvard MBA to run modern management theory

4) Growth oriented firms must pay extraordinary premiums and the median firm does not have strong returns (categorically, just because you overpaid on entry does not mean someone will overpay on exit); we also have a unique macro environment for growth so I see this as an unproven

What other strategies are there? I know a few, but I'll be a monkeys uncle before I share them on WSO. These are the PE firms I think are dream PE firms, especially if you can get in at Fund I and get a slice of the pie.

  • Associate 1 in PE - Growth
Apr 1, 2021 - 6:25pm

Literally virtually every major firm falls in one of these 4 pillars. Guess they're all wrong and you're brilliant

  • Analyst 2 in IB - Gen
Apr 1, 2021 - 8:50pm

As a current PE associate, Clearlake and Veritas are top choices - tons of deal flow, crazy returns, differentiated strategy, growing like weeds. 
 

Evergreen Coast (Elliott) is also pretty interesting 

Apr 6, 2021 - 5:41pm

As a current PE associate, Clearlake and Veritas are top choices - tons of deal flow, crazy returns, differentiated strategy, growing like weeds. 
 

Evergreen Coast (Elliott) is also pretty interesting 

Veritas numbers are incredible. Culture/lifestyle I've heard is quite bad, Apollo-like.

Flip side is if there returns hold up, or even gradually mean revert, there's still runway to get quite rich.

Array
Apr 5, 2021 - 10:26pm

Thoughts on Carlyle and Brookfield infra teams?

Quant (ˈkwänt) n: An expert, someone who knows more and more about less and less until they know everything about nothing.

Apr 7, 2021 - 10:40am

These are such new shops in the Infra space with the exception of Stonepeak and GIP 

MIRA, Brookfield are definitely top players

Array

Apr 2, 2021 - 3:59pm

Absolutely killer returns. Not sure if that leads to a favorable junior experience but probably a great learning experience. They've really carved out a nice niche for themselves. Not my cup of tea though.

Array

  • Principal in PE - LBOs
Apr 3, 2021 - 1:47pm

Tac Opps was way cooler 5 years ago when they were launching the strategy. A lot of the cool / interesting stuff has been spun out (e.g. BXG)

Apr 5, 2021 - 10:29pm

I'd second this, I think they're going to have some really interesting work ahead of themselves.

Quant (ˈkwänt) n: An expert, someone who knows more and more about less and less until they know everything about nothing.

  • Associate 1 in IB - Ind
Apr 6, 2021 - 1:28am

Underrated answer. This is my dream firm as well. 

Apr 5, 2021 - 10:57am

I think you really want to aspire to run your own fund working with a couple other founding partners with whom you really enjoy working. To get to that point, it certainly helps to come from a big, brand name shop, but only if you can reasonably attribute the fund's returns to deals you ran from sourcing to exit. Simply working on a deal doesn't give you credit for that deal in the eyes of most LPs. That's why it's rather hard for principals at MFs to break out on their own. They don't really 'own' a track record. They also typically don't have a network among endowment, foundation, pension fund or family office CIOs, so raising institutional money is very difficult. As a result, raising a first fund typically means leveraging their own money, family connections and maybe a few UHNWIs they know. 

After that first fund, the only thing that really matters is investment performance. But before you really own a track record of your own, savoring of the track record at the fund where you previously worked can lend you a lot of credibility. That's why someone like Veritas is attractive. If it keeps performing, they'll keep expanding their partnership. Making partner at a fund with massive returns is arguably as attractive as running your own fund. It comes down to carry and whether you'd rather be a big fish in a small pond or vice-versa. There are a lot of aspects of running a fund that have nothing to do with investing. After all, someone has to handle all the operations nonsense that no one enjoys. If you're the managing partner, that's all ultimately on you. 

Still, I think running your own fund and being your own boss trumps working for other people almost every time, so my preference is doing just that. However, early in your career, that's not really feasible for most people. In my case, I had a lot of learning and maturing to do (I still do, I suppose), so if I were giving advice to younger guys today, I would suggest that you target the funds where you think you will be able to learn the most. In the end, your knowledge and your network are the only things you can really port from one place to the next.

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