Iris Running Grane : December 2009

Iris Running Grane : December 2009

Chuan Wang

In this case, a graduate candidate student Iris is trying to find a job in private equity sector. She has three choices. The first on Sunstorm Investment Group, which is one of the best buyout groups in the world. The second one is Red Horse Partners, which is a middle-market LBO group. The last one is Lepus Capital, which is trying to reposition itself as a global turnaround expert.

All three companies have their own pros and cons. What Sunstorm attractive to Iris is they have counter-cyclical offerings. Sunstrom’s restructuring advisory service cam assite company with finance issue when they need. Since Iris had some structuring experience, Sunstorm appeared to interested in her in this aspect. But this company has two problems. The first one salary. Since part of the salary come from the capital company made from their fund and this company has 500 employees, which contain 250 investment professionals, Iris cannot earn a lot. Also, the culture of data-driven and very intense make Iris feels uncomfortable. For Red Horse, it also has several attractions for Iris. The first one this company focuses on companies with good financial condition and located at Texas and Southwest, which is a region underserved by LBO firm. Iris’s cleantech background makes her perfect choice, under the nature of cleantech industry. Also, Red Horse seems less concern about the economic situation because they never use too much debt and all LBO deals in their price range are local. Red Horse also has several cons. Iris worries that current economic situation will get her off to a slow start. Also she wonders the deploy of new fund will affect the on-going investment strategy. Lepus Capital promise Iris a good future. Once Lepus reposition successfully, Iris can be a partner and the salary now looks pretty good. But the problem is this company’s future is unclear right now. Some of companies they invested in is facing bankruptcy and have other financial problems.

From my point of view, Red Horse is the best choice for Iris. For Sunstorm, first off, is way too big for Iris and company culture is not suitable for her. Iris want to work in an company that have a compatible firm culture not the data-driven and hierarchical culture like Sunstorm has. Also, it seems that Sunstorm’s future is intense too. Sunstorm’s 2006 vintage fund perform not well and may face big trouble. This situation is contradicted to Iris belief that she want to work in an stable company that do not need raise fund in the future. Same things for Lepus. Lepus’s future is even more unclear than Sunstorm. Lepus need to reposition itself completely which means they may need to turn the whole company to a different direction. This action can already make this company unstable enough not even to say their exciting funds are already in big trouble. Red Horse, on the other hand, seems to be the best choice for Iris. First off, this company do not have too many leverages which means they will be less sensitive to the economic fluctuations. Second, Red Horse have a pretty good future because all companies they invested in are in an area that is “fresh” for PE company and this area is suitable for what Iris want to do in the future. Also, the Iris likes their partners and the location of this company.