After Memorial Day we kicked off the second week on Tuesday with a presentation held by BTA Partners’ Paul Toldalgi. He gave us an overview of investment market, different types of funds and his views on Dodd-Frank reform. Even though the topics were covered in general level, the talk strengthened our understanding of financial markets and gave us some background knowledge needed for other lectures and company visits we were about to attend during the week.
Later the same day we visited General Atlantic, a very successful growth equity company. Matt Nimetz, an Advisory Director of the firm, explained briefly the operation model of the company. GA typically looks for 20-40% minority holding in companies and its current portfolio consists of 50 companies with an average holding period of 5,5 years. GA employs 200 people and has five different teams focusing on following investment sectors: Business Services, Retail & Consumer, Financial Services, Healthcare and Internet & Technology.
It was very impressive to see how the company managing close to $20 billion can successfully operate globally in five very broad investment areas with relatively small number of employees. On top of this the company is involved in philanthropic activities and considers not only to the profitability of the investment but ethical aspects as well before getting involved in a business. Even though these limiting factors may mean turning down potential profits, I have to admire GA’s integrity in this respect.
Later the same week we visited another private equity company, Zephyr Management. Regardless of its smaller size (in comparison to GA), the company has been able to find its own niche investment strategy by focusing on SMEs in developing countries. This strategy requires high understanding of the local economies, political situations, culture, demographics, customer behavior etc. However, this type of investment environment tends to be less competitive and regardless of the small market size in certain regions, strategy has proved to bring in high returns in relation to the amount invested. Similarly to General Atlantic, Zephyr’s strategy is to stay out of the auctions, where prices tend to get too high – decisions to invest are made only when the growth potential of SME meets the price.
Towards the end of our meeting Zephyr’s management gave us valuable advice regarding our careers. Management emphasized the importance of finding everyone’s own “relative advantage” and encouraged us to look for opportunities in industries with bright future and also to find a region that may have higher demand for the skills one has to offer (lower competition). Their ideology was very close to the one introduced in one of our pre-arrival ridings for the MBA program (P.D. Broughton: Ahead of the Curve, Two Years at Harvard Business School) and is definitely one of the key takeaways for myself from the second week.
Overall I was very satisfied with this week’s lectures and company visits. Not only did we learn about finance and consulting, but we also got plenty of guidance regarding our future careers. Nevertheless, it may have been devastating for some foreign students to hear how difficult finding a job in New York can be. Not only is the competition tense, but also the limited availability of visas further complicate the situation. Getting connected and/or gaining recognition in a multinational corporation outside US seem to be the only ways to earn the access to the country; “Not easy, but not impossible” as we were told during our visit to Ernst & Young. Cleary Frank Sinatra’s close to 40-year-old wisdom of New York is still valid: if you can make it here, you can make it anywhere. Hopefully the new connections made during this module will bring some of the students closer to their own American dream.