Even as investors became more comfortable underwriting investments without meeting general partners during the pandemic, middle-market investor bases remained North America-focused last year.

“We’ve seen North American LPs underwrite new North American fund relationships throughout Covid – in many cases committing to funds with no in-person interaction,” notes Capstone Partners CEO Clay Deniger in Preqin’s 2022 global private equity report. “This approach was necessary to maintain a new relationship pipeline capturing pandemic vintage years.”

Lifting mask restrictions and the restoration of normal travel restrictions should allow cross border travel to resume, and with it, the international investment that’s been missing from recent North American fundraisings. Capital from abroad is increasingly a desirable target in a more crowded market. A robust 54 emerging managers closed first-time funds through the first three quarters of 2021.

Comfort with virtual meetings could actually gin up cross-border investments. GPs previously taxed by frequent travel for introductory or long-shot meetings have now developed comfort with Zoom or Teams intros. Going forward, follow-on meetings can focus on the most promising potential relationships.

To some extent, international travel has already resumed for the M&A set. Grant Thornton’s national managing principal for M&A Elliot Findlay told us international buyers were on the move in the U.S, as recently as the fourth quarter of last year. It may be only a matter of time before the capital in those same markets catches up.

Brandon Zero