It can get complicated, so he drew a diagram.
It's a late August morning in Jim Coulter's office on the 33rd floor of one of San Francisco's tallest buildings [and] he's at a whiteboard, diagramming the private equity business in green marker. "It's a three-box model," Coulter says, drawing boxes and filling them in with abbreviations—"SP" for "stockpickers," "DG" for "deal guys," and "PM" for "portfolio managers." Each player in the buyout industry uses its own blend of Coulter's three boxes. TPG, Coulter says, emphasizes portfolio management and deals. Portfolio management isn't about stocks. Rather, it's a focus on improving the performance of acquired companies, often in the tiniest ways. Coulter argues that it's TPG's operations team—60 fixers who go into companies and search for efficiencies—that sets the firm apart, not the stockpickers or deal guys, who put the purchases together. "There is some secret sauce to what we do," he says.
That's enough for today, though. Mustn't reveal too much.
TPG: The Operators [BusinessWeek]