Deal-by-deal private equity is in the wind. The space is maturing in the US, but it is in the early stages internationally (which is why it still qualifies as news in FT).
Advantages for LPs:
• Proximity to the underlying asset(s)
• No lag between investment and deployment
• Better visibility into the operations
• Opportunity to be involved and add value
• Easier to be focused on certain assets
• Decide on a deal-by-deal basis (i.e. more tailored)
• Enhanced control mitigates risks
• Strong alignment with the sponsor
• Flexibility in capital allocation
Advantages for PE sponsors:
• Each deal is autonomous and independent
• Economics of a good deal aren’t diluted by a bad deal
• Customized lifetime for each deal
• Ability to pursue special situations that wouldn’t fit a fund mandate
• Entrepreneurial approach incentivizes efficiency
• Adaptability to market changes
