Raising a traditional private equity fund has become more difficult since 2008. This, coupled with investment restraints and increased reporting requirements has led an increasing number of investment professionals to complete deals on a deal-by-deal basis as independent sponsors.
“Some firms have wound down. All of those professionals in this very mature market have a ton of expertise that is now migrating into the family offices or going independent. It used to be a family office would only be able to invest with a fund or a fund of funds, but that’s not the case anymore,” says Howard Romanow, a chief financial officer with Island Management, a family office that invests both directly into deals and into private equity firms in a video interview with Mergers & Acquisitions. “Many are tired of paying the fees charged by private equity firms for the returns they are providing and the incremental risk many are taking to try to generate carry. If you can do it yourself with your own team, you can downsize the risk and downsize the cost structure.”