Are Family Funds a Threat to Private Equity Funds?
Mark Davis, Mark Selinger and Eleanor West
McDermott Will & Emery
For most of the past two decades, private equity (PE) funds have had only two types of competition: strategic investors and each other. Special purpose acquisition companies, business development companies and hedge fund side pockets all emerged during this period, but none have really challenged the primacy of PE funds. In the past few years, however, a new form of competitor has emerged: their own limited partners (LPs). To be more specific, the threat is coming from high net worth (HNW) families that used to form the backbone of many PE funds, before institutional money came pouring in.