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The Research Pitch

March 13, 2021

How GPs can choose the right partner for the long haul

Many partners at private capital GPs are experts in their field but not in how to value their firm (typically their largest asset), who to talk to about selling a stake, or what steps to take when approached.

It's an ever-present issue as the GP stakes strategy—whereby outside investors purchase a minority equity stake in a GP's management company—continues to proliferate within the industry.

Specialist firms are raising or have recently closed on over $20 billion in funds, in addition to the balance sheet capital that a handful of sophisticated limited partners have available to buy stakes.

With so much dry powder, the number of such deals is expected to rise substantially in the coming years.

Just last week, two sizable deals were announced. Boston-based, mid-market buyout firm Parthenon Capital sold a stake to Petershill, the GP stakes unit within Goldman Sachs, and Chicago-based credit firm Monroe Capital sold a stake to Bonaccord Capital Partners, the GP stakes division of Aberdeen Standard.

These deals speak to the continued success Petershill has found in the space, as well as Bonaccord's rising profile as it seeks to raise and deploy its first fund.

Beyond the number of deals closing, hundreds of GPs are receiving unsolicited calls from GP stakes firms looking to invest or bankers seeking to facilitate a deal.

Senior executives often don't know who to call or what next steps to take to ensure they receive a fair sum.

I have personally received calls from GPs in this exact position and it's why I decided to write this analysis aimed at helping private capital firms think through how to select their GP stakes partner.

My research goes into initial questions to consider, strategizing about what type of partner suits a GP's individual needs, why the highest bidders don't always win deals, and much more.

Download the analysis: "Choosing Your GP Stakes Partner"

If you're a GP and have received offers, or if you're interested in selling a stake in your firm, I'm happy to speak with you and answer any questions.

Best,

Wylie Fernyhough
Senior Analyst, PE Team Lead

Market Updates

VC valuations in Europe soared in 2020, increasing year-over-year at all financing stages in an incredible display of investor confidence.

What's driving the trend?

What does that mean for exit valuations?

What's the landscape look like for Europe's growing group of unicorns?

read the report

Thematic Research

Venture Capital Trusts Overview – In the UK, retail investors have also become an increasingly important part of the venture ecosystem through their involvement in venture capital trusts. London-based analyst Nalin Patel offers a detailed overview of these VCTs and the role they play.

TinyML Holding the Edge Closer – What is tiny machine learning? Why is it capturing the attention of so many researchers? In premium content that we're unlocking for wider release, analyst Brendan Burke takes you to the IoT edge.

Emerging Tech Research

As the world begins to look past the pandemic, what's next for the future of agtech?

Several factors are set to drive investor interest in the space, according to analyst Alex Frederick, including ag biotech, digitization and indoor farming.

The industry is also adapting to the planet's rapidly changing needs.

Download our latest agtech research

Huge deals. Surging valuations.

Startups in the retail health and wellness tech sector are proving popular with VC investors, according to analyst Kaia Colban.

And new government and payor commitment to virtual health could spur even more innovation.

Download our latest research on retail health and wellness tech

Webinars & Events

Save the date for these upcoming events:

March 17 — Our analysts will discuss our latest Benchmarks and fund performance data, with a spotlight on first-time funds and emerging managers. Register here.

March 18 — Emerging tech analyst Brendan Burke will be participating in an IoT Hub Meetup event discussing IoT and VC.

March 24 — Our VC analysts will walk through the latest valuations data across the US and Europe. Register here.

Deal Commentary

Mobility tech analyst Asad Hussain weighs in on the news that Cruise is in talks to acquire autonomous driving startup Voyage:

"Voyage has targeted an attractive market, as the population of retirees is expected to grow significantly over the next few years.

"Additionally, we believe Voyage's technology—which is focused on automated vehicles within retirement communities—is an attractive asset for Cruise, which largely focuses on automation in dense urban environments.

"Exposure to more structured environments such as retirement communities should enable Cruise to commercialize faster, as these use-cases have much fewer variables and safety hazards compared to dense urban environments.

"Going forward, we expect to see more consolidation as additional smaller, niche tech players are acquired by leaders in the autonomous driving space."

Asad Hussain

Senior Emerging Technology Analyst
Mobility Tech

In the News

A sample of our insights recently featured in the press:

As Deliveroo gears up for an IPO, analyst Alex Frederick details where delivery apps are focusing their efforts to cut costs and increase profitability. [The Telegraph]

Following a $300 million funding round for information security startup Snyk, analyst Brendan Burke explains why VC investors are "doubling down" with mega-deals in the space. [Business Insider]

Discussion persists around the Bay Area's changing role in the broader VC world. Analyst Kyle Stanford offers his views on what will change when in-person meetings and pitches resume. [Public Comment]

If you're a media outlet interested in interviewing our analysts, contact our PR team.

ICYMI

Here are highlights from our other research content published this quarter:

Market updates

Thematic research

Emerging Technology Research deep dives

Coming next week (subject to change)

2020 Annual US PE Middle Market Report
Analyst note: An LP-focused framework for estimating large capital calls
ETR: Internet of Things

Thanks for reading! Feel free to email us any time with feedback, questions or tips!

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