Private Equity Fund Prestige
Hey guys,
How would you rank how good a PE fund is? By size?
What would be like a small PE firm, MM firm, an a large firm in terms of AUM?
100mil, 1 bil, and 10 bil respectively?
Hey guys,
How would you rank how good a PE fund is? By size?
What would be like a small PE firm, MM firm, an a large firm in terms of AUM?
100mil, 1 bil, and 10 bil respectively?
Career Resources
You rank a fund by the people there and their performance.
Small is less than 500mm, middle maket 500mm-2billion, large >2billion
That said prestige isn't solely a function of aum
by >2 billion you mean for the latest fund, not total aum, correct? there are many middle market firms with over $2 billion in management total
A fund is deemed "middle-market" based on its bite size. Though it's fairly correlated to fund size, in reality it has nothing to do with it.
Middle market is designation of strategy, not a designation of prestige, size, or AUM.
Futurectdoc's figures would be more accurate for average fund size and not AUM, that is correct.
However, like Nouveau said, you should instead look at their investment strategy. Most firms will state on their website that they look for i.e 250mm to 500mm equity checks for example.
Also, fund size isn't good when comparing different strategies.
Summit partners for example has a relatively large AUM but it will never take down large deals or even medium level deals. Even when they do debt financing for their deals, the checks written are relatively small.
AUM is usually correlated with success and therefore prestige (obviously since you had to be good to raise that much) but it's not the only factor or even the main factor. On the sellside, bigger is better because bigger = more fees.
But on the buyside, it doesn't matter HOW you make money as long as you make money. In fact, you can see that recently the larger funds are actually doing pretty badly (TPG single digit returns, KKR negative) while the top mid market shops are doing much better. When you have carry in the game, performance is the most important aspect of a PE shop and what determines its "prestige" or quality.
But to answer OP's question, look at average equity check size instead or go by average fund size. AUM can be misleading if you consider a relatively new PE fund that only has 2 funds raised but both are 1bn+ versus an old PE firm that has 5+ funds but each average fund is only $500mm.
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