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Many of these firms use debt to fund deals, and they complete bolt-on acquisitions for portfolio companies. From a career perspective , growth equity appealed to many bankers and consultants who didn’t want to be “pigeonholed” in venture capital (limited exit opportunities) or suffer through “banking hours” once again in private equity.
They do not invest in risky biotech startups attempting to cure cancer (at least not within their traditional PE portfolios). Pharmacies are closer to retail companies; nursing facilities are like REITs or real estate; small physicians’ practices are like consulting firms; and HCIT companies could be more like software or IT services firms.
Also, many long-biased funds tend to have more concentrated portfolios since they often aim to become one of the top shareholders in each company. Think: a deep review of companies’ financial statements, 3-statement models , and DCF-based valuations. hiring MDs to analyze biotech companies).
Its “portfolio” consists of that single company, assuming it finds and acquires one. Many search fund founders are relatively young (35-40 or less) and come from banking, consulting, or general management backgrounds; many also have MBAs.
If you haven’t worked with high-growth companies in banking or consulting, think of other cases where you had to do a deep dive into a company’s operations or economics to build a model or make a recommendation and use this to support your interest. Q: Which portfolio company of ours would you have invested in?
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