Thank you to the WSJ for the informative article. Private equity is increasingly stepping outside traditional commingled fund structures, for good reason.
A few key takeaways from this recent WSJ article on the rise of direct deals and SPVs:
- Funds are using SPVs and deal-by-deal structures to move quickly on opportunities, especially when flagship funds are fully deployed.
- Family offices and individual investors, fueled by generational wealth transfer, are increasingly seeking direct exposure to specific deals rather than blind-pool funds.
- Established firms are turning to direct deals as a strategic complement to traditional funds.
- Slower fundraising cycles and smaller fund sizes are pushing sponsors to find alternative ways to stay active and competitive in deal markets.
- While direct deals offer alignment and creativity, they can be harder to execute for larger transactions due to the complexity of assembling investor groups.
What does this mean for business owners?
- Access to capital is becoming more flexible, but more competitive – with firms using deal-by-deal structures like SPVs instead of traditional funds, business owners may find it easier to attract investment, even when funds are full.
- Investors are becoming more selective and thesis driven – with capital being raised for specific deals, investors are backing companies with a clear story and compelling strategy. Business owners need to articulate exactly why their company is a strong, standalone opportunity.
- Middle Market businesses are in a strong position- Direct deals are easier to execute at smaller scales so lower middle and middle-market businesses may see more interest from private equity.
As the deal landscape continues to evolve, business owners are taking a more proactive approach – planning earlier, understanding who they’re selling to, prioritizing certainty of close over headline price, and working with experienced advisors who can navigate increasingly complex deal structures.
If you’re thinking about your next steps for your business, the team at Chinook Capital Advisors is here to help. Reach out to co-founders Ed Kirk or John O’Dore for a confidential conversation.
