Everyone needs to start at some point, but what do private equity firms look for when backing first-time funds? At the LP Appetite for Emerging Managers panel of Mergers & Acquisitions’ The Best in M&A Speak virtual event, where we announced the winners of the 2021 Top 10 Middle-Market Deals of the Year, industry experts weighed in on how their firms like to work with emerging managers in the middle market. Panelists included: Joshua Sobeck, partner of 747 Capital; Daniel LeMoine, director of BPEA; and Susanne Forsingdal, managing director of Allianz Global; interviewed by Mergers & Acquisitions contributing editor Danielle Fugazy.

“You’re getting a seasoned group of professionals, typically real experienced but no legacy portfolio to deal with, and an intense focus on the success of this first or second vehicle because it is, in essence, the basis of their whole career, so they’re really laser-focused on making sure that it works,” said Sobeck.

“Starting with a first institutional fund, you don’t usually have the capital capacity to have the same infrastructure that you did,” noted LeMoine. “So, we understand those challenges and we’re generally okay with that if we’re comfortable with the way a group can invest and invest together and we can help figure that out.”

“What are our values? How do we talk to each other? How do we deal with these agreements?” pondered Forsingdal. “All of that needs to be right from the beginning, and if it’s not, it needs to get right soon, because otherwise it’s going to be absorbing all of the energy out of the team and wrong calls will be made on making investments.”

For the full discussion, watch the video above.  And click here for 2021 Top 10 Middle-Market Deals of the Year.