The article found below in the comments section examines what Limited Partners (LPs) seek from emerging General Partners (GPs) in private equity, particularly as fundraising challenges persist. Emerging managers face significant hurdles due to investorsβ preference for large, established GPs in recent years. However, new GPs can improve their chances by focusing on four key areas: alignment, differentiation, track record, and strategy.
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LPs value GPs who invest significant personal capital into their funds, ensuring strong alignment. Emerging GPs, without the financial cushion of large management fees, often fulfill this preference.
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LPs are drawn to unique and well-defined strategies, especially those emphasizing operational value creation. Popular sectors include industrials, healthcare, and software, while buyout strategies are preferred over others.
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A demonstrated track record is essential; many LPs require a minimum of three successful exits. Emerging managers face higher scrutiny, especially those launching first-time funds.
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Despite meeting these criteria, some LPs still favor larger, well-known firms for ease of internal approval. Emerging managers need to maintain strong investor relationships for future opportunities as fundraising conditions improve. The article concludes by highlighting the importance of networking and ongoing engagement between GPs and LPs
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