Davis Polk partners Andrew Ahern and Michael Hong were featured in Private Equity International discussing creative fundraising in a challenging market.

Considering the tough market for private equity fundraising, Michael said, “We all know about smaller fund sizes, LP tender offers, fee discounts and calling this particular vintage of fund an annex fund or a bridge fund, signaling that this was an aberration and normal scaled funds will follow. Plus, the secondaries market has obviously exploded as a tool to hold onto high-performing, fee-generating assets for longer. What people are not talking about as much, but need to, is that it has been a long winter and it’s clear that some firms were better prepared than others.”

Pointing to a few bright spots in the fundraising environment, Andrew noted, “It has been the case that cumulative fundraising totals have been and will be flatter for a while, but if you compare the total amount of capital raised last year to where we were a decade ago, it is still dramatically higher.”

Speaking about what counsel can bring to the table, Andrew said, “While we are not placement agents and we do not raise capital for our sponsors, we can help managers strategize and better understand the market and creative tools at their potential disposal. We provide strategic advice to sponsors regarding the types of GP-led transactions to pursue based on their objectives and the state of play of their portfolio.”

“In more challenging times, creativity will attract a premium and having a service provider that understands this can be critical,” Michael added. “That means having not just the ability to access other expertise within the firm, but also the ability to provide a certain amount of therapy and guidance.”

“Ready for the fundraising spring,” Private Equity International (April 1, 2025) 

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