Notable Trends in the Structures, Fee Arrangements, Adoption and Growth of Deal‑by‑Deal Structures Used by Independent Sponsors

Although its foundation is built on the blind pool, committed funds that are ubiquitous in the sector, the future of the PE industry will arguably include wider adoption of alternative fund types and approaches. Hints of that evolution are evident in the rise of deal-by-deal structures among independent sponsors, which use many of the same concepts – i.e., economics, governance, etc. – of traditional PE funds but are only for one investment at a time. As a burgeoning genre of PE investing, deal-by-deal structures have their own fee, structure, governance and financing trends. To obtain insights into developments in this area, the Private Equity Law Report recently interviewed McGuireWoods partner Jon W. Finger on the growth of the deal-by-deal sector and notable trends. This article examines the scope of the sector, traits of the various central participants, the size of deals typically consummated, common ranges of fee arrangements, the growth of hybrid versions of the vehicle and the future of deal-by-deal structures. See our three-part primer on deal-by-deal funds: “Structural Overview and Investor Perceptions Affecting Adoption” (Feb. 18, 2020); “Key Fundraising and Structural Considerations” (Feb. 25, 2020); and “Balancing Deal Uncertainty Against Attractive Carry Opportunities” (Mar. 3, 2020).

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