Per the 2020 Global Private Equity Report published by Bain Capital, the classic LBO fund is in decline. An emphasis on identifying specific opportunities within certain industries and the need for specialization in an increasingly competitive environment is causing funds to focus their entire strategy on specific sectors or strategies.
Growth within the buyout category has also shifted significantly. For the first two-thirds of private equity’s relatively brief history, the industry was shaped by the classic buyout fund, one geared to hunt for value in a number of industries and sectors with a diversified portfolio. Since 2010, however, these classic funds have been losing share to specialists—firms that have carved out clear areas of expertise and exploited them aggressively, including hyperfocused subsector funds, growth funds, ESG specialists, long-hold funds, etc. The share of capital raised for classic funds has slipped from a recent peak of 80% in 2013 to 56% at the end of 2020.
Click on the link to learn more about specific examples offered including Vista, Audax and Roark in the larger, megafund category. The article also includes smaller funds, citing both Corten Capital and Cove Hill Partners.