FUNDLESS SPONSORS

By: Evan Vitale

Private equity is a difficult business.

In order to get started, one has to raise capital but, in order to raise capital, one must showcase a track record of

success.

In the past this was done very slowly, with the private equity executive

hopeful brokering small deals in an effort to build credibility in the industry before moving up to larger and larger

deals.

That is a tough, long road for anyone to walk.

It is made even more difficult in today’s market where the

competition is as fierce as it has ever been and, therefore, prices

are through the roof.

The new entrant to the world of private equity is beaten out by bigger firms before he can even get out of the starting

gate.

So what is he or she to do?

An interesting direction some entrants into the market are

taking when they find a deal but are unable to raise capital

themselves is to broker the deal out to a larger firms, acting as a “fundless sponsor” for the deal.

These deals have become more and more prevalent in the world of

private equity over the past five years.

Will this mode of interaction between

businesses and private equity firms persist into the

future or is it just a fad?

Check out my blog to find out more!

evanvitale.net