How GPs can choose the right partner for the long haul
March 10, 2021
GP stakes deal activity has surged in recent years, and 2021 appears to be on pace to set records in this space. More than $20 billion is being raised across nearly a dozen GP stakes funds, and strategic buyers—including insurance companies and sovereign wealth funds—are looking to do more direct deals.
Our latest analyst note explores how GPs should be thinking about their partner for the long term when approached to sell a stake in their firm. Among the takeaways:
Our latest analyst note explores how GPs should be thinking about their partner for the long term when approached to sell a stake in their firm. Among the takeaways:
- PE firms need to answer a series of basic questions before moving forward with a deal, covering everything from active vs. passive partners to succession plans.
- Many smaller or middle-market GPs don't sell to the highest bidder. Rather, they factor in the value-add from each bidder and look at longer-term value creation.
- Firms must pay attention to the minutiae of the deal—these partnerships last anywhere from seven years to more than 20.