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> A PE interested and invested for growth is always the best outcome. (Throwaway) I work at a top ~10 PE. This is what we do. One portfolio company has a pro

> A PE interested and invested for growth is always the best outcome. (Throwaway) I work at a top ~10 PE. This is what we do. One portfolio company has a product on old tech. We bring in a product team, a CTO, internal tech teams. Help shape a roadmap to tackle the most egregious tech and product debt so teams can move faster. Fix non-existent or outdated pricing strategy that has not evolved with the industry. Fix, grow, or evolve GTM to reach new customers. Help bring fresh leadership resources in when needed. Industry is typically "boring" and systems are valuable, but aging. We invest, modernize, and try to grow new rev streams, new customers. Portfolio is SaaS focused (can't speak for those that invest in real estate and healthcare). The employees of the PE also co-invest so everyone is aligned to help the portfolio companies grow and exit. This is a multiyear process.

sandeepkd 14d ago
Naming couple companies that you acquired for whom you changed the trajectory would be a lot stronger signal without revealing your identity. On side note, its rare to see anyone fixing the old tech, its hard to fix, needs a different kind of talent thats hard to hire for the PE money. The folks who can understand some one else's decade old code and run their imagination through all the possible assumptions or trade off that might have been made in code/system are rare to find. Finding new customers, finding more things to sell, finding synergies with other items in your portfolio, increasing the price for existing products are more realistic.
- works_at_pe 14d ago
  We have portfolio level CTOs that specialize in this playbook. Fixing the tech means many things. Many companies don't even have CI (forget CD). Some have really broken processes and handoffs between teams. And yes, some are running COBOL backends. Sorry, naming a portfolio company would reveal the PE.
bruce511 14d ago
I'm going to side-track a bit, but since I'm being courted by PE I thought I'd ask. >> The employees of the PE also co-invest Is this voluntary, or mandatory? I ask because I've seen clauses along the lines of "75% of bonuses are paid in shares, not available for sale for 5 years." Using bonus money to buy shares props up the share price, but delays the employee actually seeing the bonus for 5 years. Seems pretty win-lose to me, and kinda puts me off. Is this a standard practice you mean by co-invest? (As an aside, I'm not a fan of buying shares where I work, that's not a good portfolio-diversification model. If the business goes under it's not good to lose both your job, and investments, on the same day.)
- works_at_pe 14d ago
  Differs by company. Best thing you can do: check CalPers (CA pension: https://www.calpers.ca.gov/investments/about-investment-office/investment-organization/pep-fund-performance https://www.calpers.ca.gov/investments/about-investment-offi...) listing of investments for your PE's internal rate of return and historical performance for some funds. There is carry and co-invest. Carry is a grant (like options). Co-invest is additional funds that you commit for capital calls when the fund invests. My comp is base + cash bonus (1.#x base) + carry (~2/3 of my base every year for 10 years). Yes, locked away until some distribution event. Bonus is cash (YMMV), but if you don't already have the capital for a capital call, you're right that your bonus effectively ends up in the fund to meet capital call requirements at some point. Co-invest is "strongly recommended at the amount specified". Legally, they cannot compel you to, but basically the way it is worded... Should you co-invest? Look at CalPers for realistic rate of returns. Look at the PE portfolio; do you think it holds? Ask them to walk you through a case study of their timeline with a successful portfolio co. CalPers is not playing around. Some funds will 3x, 4x over the lifetime (historical performance not indicative of future perf). You pay capital gains tax on that earning. Best case: you already have the cash to cover the co-invest capital calls. Worst case: you are borrowing money or using your bonus to plow more into the portfolio.
  - bruce511 13d ago
    Thanks

sandeepkd 14d ago

Naming couple companies that you acquired for whom you changed the trajectory would be a lot stronger signal without revealing your identity. On side note, its rare to see anyone fixing the old tech, its hard to fix, needs a different kind of talent thats hard to hire for the PE money. The folks who can understand some one else's decade old code and run their imagination through all the possible assumptions or trade off that might have been made in code/system are rare to find. Finding new customers, finding more things to sell, finding synergies with other items in your portfolio, increasing the price for existing products are more realistic.

works_at_pe 14d ago
We have portfolio level CTOs that specialize in this playbook. Fixing the tech means many things. Many companies don't even have CI (forget CD). Some have really broken processes and handoffs between teams. And yes, some are running COBOL backends. Sorry, naming a portfolio company would reveal the PE.

bruce511 14d ago

I'm going to side-track a bit, but since I'm being courted by PE I thought I'd ask. >> The employees of the PE also co-invest Is this voluntary, or mandatory? I ask because I've seen clauses along the lines of "75% of bonuses are paid in shares, not available for sale for 5 years." Using bonus money to buy shares props up the share price, but delays the employee actually seeing the bonus for 5 years. Seems pretty win-lose to me, and kinda puts me off. Is this a standard practice you mean by co-invest? (As an aside, I'm not a fan of buying shares where I work, that's not a good portfolio-diversification model. If the business goes under it's not good to lose both your job, and investments, on the same day.)

works_at_pe 14d ago
Differs by company. Best thing you can do: check CalPers (CA pension: https://www.calpers.ca.gov/investments/about-investment-office/investment-organization/pep-fund-performance https://www.calpers.ca.gov/investments/about-investment-offi...) listing of investments for your PE's internal rate of return and historical performance for some funds. There is carry and co-invest. Carry is a grant (like options). Co-invest is additional funds that you commit for capital calls when the fund invests. My comp is base + cash bonus (1.#x base) + carry (~2/3 of my base every year for 10 years). Yes, locked away until some distribution event. Bonus is cash (YMMV), but if you don't already have the capital for a capital call, you're right that your bonus effectively ends up in the fund to meet capital call requirements at some point. Co-invest is "strongly recommended at the amount specified". Legally, they cannot compel you to, but basically the way it is worded... Should you co-invest? Look at CalPers for realistic rate of returns. Look at the PE portfolio; do you think it holds? Ask them to walk you through a case study of their timeline with a successful portfolio co. CalPers is not playing around. Some funds will 3x, 4x over the lifetime (historical performance not indicative of future perf). You pay capital gains tax on that earning. Best case: you already have the cash to cover the co-invest capital calls. Worst case: you are borrowing money or using your bonus to plow more into the portfolio.
- bruce511 13d ago
  Thanks