Offer decision help for UMM (legacy vs up and coming)
Currently in a position where I’m choosing between a very established, reputable, “legacy” player (think a MDP, Berkshire, WCAS, THL, GTCR kinda place) versus an up and coming firm with huge recent fundraises and great returns though arguably less of a name brand (think Francisco, Genstar, Veritas, Clearlake esque).
This is for an associate position. Can anyone please comment on general exit opps, reputation and career trajectory between these two classes of firms? Personally think the up and coming class is more exciting, but worried that the legacy guys carry superior brand name and recognition, especially if I choose to go HF route.
Thank you all.
Would take the latter set over the former set.
Those are all great funds across each set (THL, WCAS being the most questionable in my opinion, but still good for an associate role). Pretty hard to give blanket advice here since each have their own nuances (focus area / strategy, location, etc.). Generic advice, but for this situation I would go with whatever firm you felt better about in terms of interacting with the people during the recruiting process and overall interest in the firm
These are all solid names that you've mentioned - the legacy players will have a slight edge in terms of b-school and HF placement if that's something of interest. The difference isn't so great to make a decision solely based on that though. All else equal, I would value culture/fit and strategy over anything among these names.
This is not necessarily true. Francisco has the strongest pipeline to Stanford out of all these. Have not seen GTCR, MDP or WCAS place as strongly to Harvard of late.
Of these, I have seen MDP, THL, GTCR, and Francisco the most in terms of analysts at top HFs, good amount of Berkshire guys too. Less so on the others. Never was in PE so cant help with a lot of other points
I work at one of the former you listed and recommend choosing the latter.
Thank you. Could you please elaborate on why?
You are right about HF recruiting. I get good inbound and my firm places well.
I worry about learning to invest like a legacy player with a focus on value as opposed to being aggressive with a focus on high quality assets.
I would first and foremost index to culture because the firms you listed are all over the board.
Despite the recent trend towards adcoms diversifying away from PE, legacy players generally have better H/S/W placement.
I'm more familiar overall with the legacy players (I work for one / similar fund). For business school placement, I'd say:
Berkshire > GTCR >= THL >= MDP > WCAS
Berkshire probably has the best business school placement of any UMM fund I know of. Very strong placement into HBS and pretty strong representation at GSB as well. Same with GTCR although occasionally people will go to Booth / Kellogg (also applies to MDP) but might be a bit of a geography bias. THL pipeline into HBS has been historically very solid, as with MDP. WCAS seems to send fewer people to business school overall. If you apply in Round 1 from any of these firms, you should pretty much expect Wharton as a floor although PE MBA admissions keeps on getting harder and harder with each passing year, especially if you are a male and/or ORM (at least from what I've gathered anecdotally).
Historically, these places were pretty much two-and-out models with top performers often returning post-MBA. I have recently seen people at least get promoted to senior associate now at most, if not all of these firms. GTCR actually has a three-year program where most people can do a third year as a senior associate but many leave after 2 years, generally to go to business school. I'd say Berkshire has the top reputation. The rest are still all pretty well-regarded, although probably slightly behind (ordering is somewhat subjective at this point).
Berkshire has a public markets arm (Stockbridge), which I've heard good things about. Have seen people from Berkshire PE transfer internally to Stockbridge. Couple of guys recently went to a new fund called XN, started by a guy who ran a $10B fund. THL has recently sent people to Baupost and SRS. I ran out of LinkedIn searches but know of guys from both GTCR and MDP who went to hedge funds. Not on your list but have seen a couple of guys from Lindsay Goldberg go to HFs as well. Would say that if you want a HF opportunity from one of these places, you should be able to get it if you put in the work. I've been constantly getting harassed by Dynamics about HF opportunities for months.
I don't think you can go wrong with either option per se but you should definitely factor in culture. I am very happy with the spot that I am in now although I'm sure if I landed a gig at more of an up and comer, there's a decent chance that I'd more or less feel the same. Francisco does have killer GSB placement as someone previously mentioned. Veritas has been crushing it (like top decile funds) but have heard that it's absolutely miserable there for associates. Genstar would probably be my pick of that second lot (top returns and less of a niche focus although I can't speak to the culture there).
Not sure how much you care about the industry that you'll cover but if you want to do pure-play tech investing, Francisco and Clearlake might be the best opportunities. Veritas crushes government services. MDP and Berkshire have generalist models for associates. Welsh Carson only does healthcare and tech. GTCR and THL are both also very active in healthcare and tech but also do a good bit of financial services investing.
Thanks for the thoughtful reply. Not OP, but curious about your comment that Veritas associates are miserable. In banking now, but have been really interested in Veritas - thought it seemed like a pretty great shop.
It's definitely a great shop but it's sweaty, which makes a lot of sense given the pace that they've been deploying capital. I wouldn't be surprised if their next fund is $10B+.
A friend of mine who works there mentioned that three associates quit over the span of 1-2 months not too long ago. I'm sure the pandemic didn't help things but I wouldn't take that as a great sign. He also mentioned a few months in he wouldn't mind going back to his bank, and that too, a pretty brutal one. Another friend worked with them on an extended process a few years ago while we were in banking and he said that their team was responding to emails at all times of the night. Live deals may not always be the best representation of a firm's culture / WLB but it sure seems like they are working on live deals the vast majority of the time.
If you want to do government services PE, I'd be hard pressed to name a better firm based on expertise, track record, etc. though.
I know you didn't ask for an LP perspective but a significant step up in fund size and returns driven by recent positive market dynamics are worth thinking about. The legacy "players" strategy may be more proven at their current size. If you were looking longer term with those firms then a proven strategy within a specific "strike zone" would probably be a better bet for consistent carry across multiple funds.
Did you end up making a decision?
OP here. Thanks for the help guys. Went with the firm in the second category (up and coming). What convinced me the most was just looking up how many deals they did vs the legacy player (high single digits over the past year alone vs 1-2 a year max). I’m not entirely sold on HF or B School, so seemed silly to base my choice on that rather than focusing on getting good deal experience.
Am also crossing my fingers that in 2-3 years when I’m potentially exiting, firms in the second category will be viewed on par if not better than the exiting legacy guys by HFs since that seems to be already happening in the PE world
Genstar has had very strong, consistent returns and just raised a ~$12bn fund. They are a machine in terms of placing associates at HBS/GSB. Have also heard they have a great culture (anti-hardo)
Thoughts on THL?
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