Getting into private equity is one of the tougher fields for younger folks to enter and once in, it’s also a field where few like to leave (at least voluntarily).  With low turnover amongst the upper ranks at firms combined with little need for additional VPs and other senior deal people despite new funds being raised, turnover amongst the entry level crowd is inevitable.  But how bad/much is it.  Looking at how the lower ranks of two well-known groups have changed over the last several years, TA Associates and Silver Lake Partners, provides a little insight.

First up, $12 billion Boston-based TA Associates.  From June 2007, a screenshot of TA’s website shows 23 Associates, split between offices in Boston, Menlo Park, and London.  Today, TA lists 29 Associates split amongst the same locations, as well as a new office in Mumbai.  Of the 23 listed Associates in 2007, only 4 (surprisingly) remain with TA today (2 in Boston and 2 in Menlo Park).  Just one, Hythem El-Nazer, has received a promotion and is now a Sr. VP.

TA Associates June 2007

TA Associates Today

Next up, $13 billion SF-based Silver Lake Partners.  Looking at a screenshot from June 2007, 17 Associates/Analysts are listed.  Today, Silver Lake has 25 Associates/Analysts (all new).  Of the original 17 in 2007, just three, Jason Young, Jason White, and Jonahthan Durham remain with firm today.

Silver Lake June 2007

Silver Lake Today

More analysis would certainly be needed to see how common the pattern above is amongst other big-name private equity firms, and you can draw your own conclusions on what explains the low level shuffle.  Whether TA and SilverLake tend to hire impatient opportunists or the more likely scenario that both firms having exceedingly high expectations for young staffers.  Either way, one thing is clear, if you get in on the ground floor, keep your resume handy as the the chances you’ll still be with TA or Silver Lake after several years, appears unlikely.

Forbes just released its latest compilation of the largest US-based private companies with the help of Capital IQ.  This year, Forbes finally acknowledged the fact that private equity firms are responsible for a solid chunk of the list, noting that roughly a third of the 248 entries are backed by investment groups.  There’s even an interesting slide-show covering notable firms (Bain, TPG, KKR, etc.) and their largest holdings.  

However, I find it interesting that #27, Platinum Equity with $11.35 billion in consolidated current portfolio revenue (I assume this includes international company investments as well), is considered a “conglomerate” within the list versus a private equity group and excluded.  I’m not sure where the confusion is, but this seems to be a yearly error.  Going with this logic, if we break out all of KKR’s US based and privately held portfolio companies, we come up with $123 billion in revenue.  That would make KKR a solid #1.

Most investment firms will offer referral fees to intermediaries that introduce deals that close.  Few firms actually spell it out on their websites, but countless deals have resulted from such.  Certainly a no brainer to do so.  If the demanded referral fee doesn’t make the deal worthwhile, then just don’t do the deal. At least it doesn’t cost anything to consider.

To differentiate it’s referral program from others, Southeast Florida based investment group Trivest has gone one step further.  For anyone that introduces a deal that closes, in addition to standard referral fees, the firm will also throw in a brand new Mercedes S-Class (substitutes available I’m sure).

Trivest has closed two deals (both add-ons) thus far in 2009, and while it’s unclear if their referral program was the cause, a seemingly generous referral program can’t hurt.

In the last year, Twitter’s gone from being a hot start-up to a household name.  An amazing story that seems to continue.  Twitter’s traffic is up 5x (estimate according to Quantcast) since the beginning of the year, and while its ability to generate big-time revenue is still a work in progress, for the time being it doesn’t really matter.  

In any case, with millions of individuals signed-up and spending time on the service, it’s only natural that businesses have followed.  Some are being more creative with the service than others, Best Buy for example creating twelpforce, a twitter account set-up to answer customer product questions using the collective knowledge-base of Best Buy employees.  However, despite lots of attention and a nationwide TV ad campaign, twelpforce hasn’t exactly developed a celebrity like fan base with just 9,000 followers.  As other companies (big and small) try to figure out how (or if) Twitter can benefit their businesses, it looks like private equity is now stepping into the Twitter world as well.  

UK based mid-market firm Endless LLP created an account in May (amongst more firms I’m sure).  Endless hasn’t exactly demonstrated that it’s addicted to the service.  Thus far, Endless’ few Tweets have been sporadic, covering recent deals, personnel moves, and portfolio company news.  After raising its second fund in 2008, Endless is certainly on the prowl for deals, and its Twitter experiment must reflect this.  However, while it’s doubtful Twitter will ever work wonders like the occasional cold-call, the service is one of those things where it doesn’t cost anything, takes little time, and ultimately can’t hurt.  I think it’s doubtful we’ll see lots of investment firms jump on the bandwagon as well, but if we start seeing lots of Tweets out of a few that do, perhaps there’s something there.

With a very public Twitter security breach leading to leaked internal documents, one newsworthy disclosure is the top line revenue numbers company execs feel the business can achieve over the next few years.  The numbers go like this; $4.4 million for the second half of 2009, and $140 million for 2010.  Now I’m from Minnesota, but I’ve never seen a hockey stick raked that much.  Can’t argue with Twitter’s user growth, but for a company with no guessable blockbuster monetization play, the somewhat random figures are amusing.  We all know investors basically discount projections anyway, PE just as much as VC, but to see these figures batted around internally - not just in pitchbooks, is very interesting.

Anything to cheer about now that the first half of 2009 is in the bag?  Honestly, not really but at least we can say that some private equity m&a did occur.

Lookin’ at the number of buy-side transactions at some of the big firms yields the following . . .

It’s no secret the power and benefit of not only knowing how much internet traffic your website receives, but also how people got there, how long they stay, and what content they find most interesting.

While knowing traffic figures may not alter a private equity firm’s web strategy - (essentially just having a website), it is somewhat surprising that many firms don’t track at all.  Tracking site visitors doesn’t cost anything (Google Analytics seems to be the most popular), and is no more difficult than having your web admin insert a little chunk of code into the site footer.

So which firms don’t seem to care?  Checking for tracking code on a short list of websites yields a few notables . . .

Firm
Abry Partners	surprising given recent re-design and emphasis on media/communications opportunities
TPG	not too surprising given stagnant site
The Gores Group
TA Associates
Nautic Partners
First Reserve
HIG
The Blackstone Group	somewhat shocking

So which firms do care (or at least have an IT person who cared to set it up)?  Well many do.  KKR, Francisco Partners, CD&R, Carlyle, Candover, Cinven, Summit Partners, all track, but one surprise is Cerberus.

Cerberus doesn’t seem to care about keeping an up to date web presence - their last news update is still from ‘07, yet they do have Google Analytics set-up.  Now if Cerberus actually checks is another story.

Whether private equity firms as a whole track their web traffic more or less than then rest of the internet population would need a more detailed survey.  My guess is significantly less.  The quick survey above only checked mega sized firms.  Sampling several small firms yields even fewer . . .

Last month, Platinum Equity surprised everyone when news surfaced the LA-based group had entered the newspaper business.  Platinum’s no stranger to buying distressed businesses, but the acquisition of The San Diego Union-Tribune caught most folks off guard and despite the deal’s relatively small size, generated significant media buzz.  

Attention naturally spilled over to Platinum itself as people looked to learn a little more about the firm behind the deal. Google searches for Platinum Equity in March bumped up 50% as result.

Not exactly the search gains singing sensation Susan Boyle has experienced this month, but impressive for PE.

(source: Google - Keyword Tool)

Mega non-core divestiture buyout firm Clayton, Dubilier, & Rice has taken the m&a lull to improve its stagnant website.  CD&R follows KKR and ABRY Partners as recent, larger private equity firms to complete a web overhaul.  See the difference below.  Content has largely stayed the same, but navigation and ease of use are vastly improved.

Legacy

New

After stumbling across New York based mid-market private equity group Buckingham Capital’s website, one thing of note on their portfolio page is the use of pictures.  Most if not all firms break out and describe portfolio investments in some level of detail, but rarely do you see pics.

Not only does Buckingham show a pic of the business but showcases actual products as well.

Subtle, but one way to differentiate.