2 founding partners see their capacity cap at 5-6 platforms as independent sponsors.
I always say there are 3 constraints in deal-by-deal PE: targets, capital, operators.
However, there’s a 4th constraint for sponsors looking to scale: senior talent.
Another senior partner, same level as founding partners, is needed to scale beyond 5-6 platforms.
The problem is cash. IS firms typically can’t match the base comp of a larger PE fund.
Instead, compete by offering a better package elsewhere: deal-specific carry, fee-free co-investment, more autonomy, proximity to the founders, entrepreneurial feel.
Some sponsors deliberately stay at 3-5 platforms for lifestyle or preference (“I am a business builder, not asset manager”).
Today’s episode: Grant Kornman of Align Collaborate.
The 4th Constraint in Deal-by-Deal PE
1 min read
