This episode is sponsored by Davis Polk and DC Advisory

Senior dealmakers at established firms increasingly seem to be choosing to strike out on their own, much like those firms’ original founders once did during the surge in mid-market firms during the late 1990s and early 2000s.

But in those years, institutional capital was flooding into a PE market that had proven its model repeatable, whereas the landscape for new firms today is markedly different. Not only do LPs want to see differentiated strategies with a compelling story and outsized returns, they want the young managers with whom they invest to have institutional-level operations and infrastructure.

In this episode, Buyouts senior editor Graham Bippart sits down with Michael Hong, a partner in the Investment Management practice at Davis Polk, and Donato de Donato, co-lead of DC Advisory’s GP Strategic Advisory practice, to discuss the state of the emerging manager market.

They point out that there is no shortage of challenges and complications lying in wait for would-be new managers, who often may be more restricted by their previous employers than they thought, make all-too-common mistakes in their pitch decks, and may even have notions about the most important first hires they should make. But in an ever-more-crowded market, those who can carve out a unique and compelling strategy are best poised to lure LP interest away from long-established managers.

This episode was produced alongside Buyouts’ annual Emerging Managers Report, done in association with Gen II.