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PitchBook Analyst Note: Manager Behavior After Selling a Minority Stake

Q2 2021

PitchBook Analyst Note: Manager Behavior After Selling a Minority Stake

June 8, 2021

PitchBook Analyst Note: Manager Behavior After Selling a Minority Stake
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The buying of GP stakes has become a somewhat standard practice in the PE industry. For the GPs, it brings on a strategic partner and provides capital for expansion. These deals also can validate an LP's investment thesis with the firm because GP stakes investors only target top-performing firms. 

On the flip side, some LPs can be skeptical, believing that GPs, having sold a stake in their business, will prioritize boosting management fees over generating returns and carry for their investors. With this in mind, PitchBook's latest analyst note takes a deep look at how selling stakes can change manager behavior.

Key takeaways

  • If and how selling a minority stake affects IRR and TVPI quartiles for GPs, with comparisons before and after and across several strategies
     
  • The impact of stake sales on AUM growth and whether LPs are right to be concerned about GPs shifting their emphasis to amassing assets
     
  • How the number of strategies that a firm pursues is influenced by selling GP stakes over time