PE fund - Single Vs multi-owner funds

With Entrepreneurship budding in the PE world as well, there are a few PE firms individually owned that are popping up as well. The background of the key persons in question varies from wealthy individuals to ex-partners in larger PE firms. For quite a while, I have been chewing as to whether it is appropriate for one single person to be the "driving force" in a business like Private Equity.





To my mind, PE is a business of perspectives - it is about making intelligent choices, gut calls balanced with a nuanced appreciation of risks and mitigants. It’s hard for a single individual to have a deep understanding in all of these areas - in most knowledge driven businesses, it pays to have a strong team with a strong "bench strength" - a group of motley individuals with heterogenous perspectives who can argue their guts off with no display of "one upmanship".


In addition, here are a number of other important considerations regarding single-owner firms:

1. It's a one man army at the end of the day - chances of you having a Zimbabwian disaster are as much s the chances of you having a Singaporean Utopia. One needs a check on his/her own emotions, persuasions.

2. Balancing fund raise Vs deployment : I strongly believe that fund deployment and fund raising may be two sides of the same coin but are too difficult for one single individual to manage. An individual who spends

3. Succession planning : What happens if the GP gets hit by a truck ? How does the second layer find fulfilment over the longer term if they know it would always be the "owner" who would call the shots ?


4. Checks and balances : Who decides what are the priorities at any given point of time ? How does one ensure that superior governance and transparency especially at the mid-market end where not much information is available publicly anyway

My sense is that a strong core team is an indispensable tool to start with in any knowledge driven industry and PE being at the pinnacle of the same is no different. So, it is a "team-driven" firm all the way !


~Varadha
(varadha.r1@gmail.com)
+91-9940670064