How do people narrow down PE funds they want to recruit for?
the general advice I’ve heard is that before meeting with a HH I should know the fund size, strategy, industry focus and location I want to be in.
• With so many funds out there, how do people successfully screen for the funds they want?
• Would you ever have a different story for HH that have clients that you want?
• What are good industries to look out for in PE right now?
• If the funds I am targeting have a tech focus and my coverage group is industrials, how do I prepare for tech interviews? or should I stick with industrials groups to boost my chances?
This would be really helpful to hear!
Following as well
Following
1) Unless you're passionate about a specific strategy (growth, buyout, VC, etc) or sector (tech, consumer, energy, etc), a lot of people target the largest funds that they realistically feel they will get interviews with. This can be just saying I want to be at a MF / UMM fund or thinking through past exits from the group and targeting similar shops. Most people I've seen don't have a specific strategy around it to be honest.
2) I wouldn't advise this, as the HHs are in touch with each other, and a large number of them have worked at different firms. In particular Amity, SG and Ratio are very incestuous so to speak. It would also involve you preparing different strategies for interviews and probably make the entire experience more hectic than it already is.
3) Not sure if this was a COVID related question or a broader question for today's day and age.
4) In my view this depends a bit on the group you're currently with, though industrials is fairly generalist, so it wouldn't be as big of an issue. If you're from an average industrials group, it's unlikely a HH would put you in front of the best tech focused funds (best in this context broadly refers to AUM / fund size). So by targeting a sector you don't work with, unless you're from one of the top groups which places well everywhere, you'll probably have to take a step down in quality vs. if you recruited for industrials or generalist roles. This is a broad statement and I'm sure there are exceptions.
1) Seems like everyone just wants size/brand name, I agree. But doesn't it seem a bit unprepared/risky to come off without a strategy? Does the HH ever force you to pick a specific strategy and sector?
3) Just generally it seems like tech seems to be a very hot sector, industrials seems to be the old-safe path, and consumer/retail seems to be beaten down. I think same trends have always been there and COVID just accelerated the evolution of the dynamics. Could you comment on what industries would be good to go into for buyouts looking 5 years forward? Don't wanna end up in a leisure/retail fund for example in this time when everything is being hit hard.
Thanks!
I would have a strategy for sure around location (NY, Boston, Chicago, West Coast) and stage of investment (VC, Growth, Buyout). In terms of size of fund, for the purpose of the HH just have some good lines prepared about working on larger, more complex deals (this couldn't be further from the truth and I've seen the most complexity in some of the smaller deals I've looked at) or structured deal teams, etc. If you want to target MM funds then talk about close-knit culture, smaller deal teams, more exposure as a junior member of the team, etc.
I think in terms of sector it's easiest and most understandable to say you want to either be a) a generalist and get exposure to different sectors or b) work in the sector you are working in on the banking side, where you already have had experience and enjoy the sector. Targeting a sector you don't have experience in is by no means impossible, but relatively speaking would be an uphill battle and you'd need to display interest and industry knowledge in my view.
All sectors adapt and change over time, so apart from pure play retail or something like oil and gas, I don't see too many issues with various sectors over a 5 year period. Consumer/retail is a lot more than investing in Macy's and buying restaurants, and over time those funds will move more and more to a late stage consumer tech angle, is my guess, in addition to consumer products, which will retail solely or overwhelmingly online. Already L Catterton, probably the biggest consumer fund has begun investing in what 5-10 years ago might be considered pure tech.
One piece of advice, which I've posted somewhere earlier as well, is be decisive in whatever you say to the HHs. Don't be interested in buyout but "open to growth." Choose the 1-2 locations you want to be in, that's it. And as tempting as it might be to respond favorably when they send an email asking if you want to be considered for role with a top growth fund out of SF, if you've told them you want to do buyouts in NY, it is probably better to pass on that.
Can you be open to all locations, if you want to maximize chances for quality funds. Or should you really stick to just 1-2 locations?
Was actually wondering about telling HH that you want to be a generalist. I have geography and investment stage/type down, but am really not passionate about one particular industry so do not want to silo myself. HH are okay with candidates saying generalist? I understand this will take me out of the running for Silver Lake, Vista, etc. but I have no interest there anyways.
If we are targeting MM shops in a specific location, how broad can we be with size? Would it be okay to say we are interested in shops with 500mm to 3B recent fund size?
Yes, that would be perfectly fine.
If you're familiar with the specific HH's client list (they often will give it to you or a 2nd year in your group will have it from last year) it would be good to have 2-3 names of their clients that fit your criteria / would be of interest to you.
Et deserunt labore quos quaerat officiis fugiat dolorem. Distinctio ut id iure recusandae alias aut magni. Aspernatur voluptas ex repellat. Laboriosam consectetur laudantium possimus sit.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...