In its 2017 edition of the Global Private Equity Report, Bain Capital reports that funds are creating specific sourcing roles to help identify opportunities:
Some PE firms are deploying their advisers in very specific roles. EQT uses experts on call, retaining former senior executives to help pursue assets in industries they know well. Temasek Holdings has taken a slightly different tack, building a network of well-connected executives in Europe and the US—such as PepsiCo CEO Indra Nooyi—who are retained to help with business development. KKR uses regional experts, such as the for- mer president and CEO of Bolloré Africa Logistics, to help expand KKR’s franchise in Africa. And Advent International has invested in about 70 part-time operating partners who are assigned to sector-specific investment teams to focus on sourcing deal opportunities in those sectors.
Based on discussions with private equity professionals, Bain estimates that a substantial amount of time is being devoted to this effort. By role, the amount of time allocated to networking is estimated as follows:
- 50% – Formal Advisors
- 30% – Managing Directors
- 25% – Senior Directors
- 10% to 15% – Junior Directors
Even with this effort, the report estimates that PE funds only see 18% of the deals that might be relevant to them. Please see the report for an excellent chart on page 44.