This article is part of the “Perspectives in Private Equity” series.
According to a recent report by Campbell Lutyens, GP prices and GP M&A transactions will reach record levels by 2025, with sales volume increasing by 40% year-on-year. The survey reported 164 private GP transactions in 2025 against 117 in 2024, while the continued development of other universal brands drives managers to look for options and capital to support the next wave of platform growth.
Performance Drivers
For GPs, both new and established, GP marketing can offer many benefits. With the high start-up costs of entering the market now for first-time managers, an increasing number are looking for some form of GP investment or seed money on day one. Even established GPs may look for investors in GP funds as an effective way to pay debts or to promote relationships that can accelerate growth and provide marketing power to new funds when they are faced with a fund that raises the wind of the current situation.
When used correctly, the money from the sale of GP can be used to spread and commit to new strategies or areas, make important investments or improve technology or other operational capabilities, hire new talent and increase their commitment to GP in existing funds, if requested by the financial, to show compliance with LPs.
In addition to fundraising and growth, GP figures can also provide an important exit or distribution strategy as many management firms enter their third or fourth year. Whether it is for succession planning or to reward key team members with improved access to capital in terms of equity grants or awards, money from GP stakes can be deployed by founders to encourage young talent and provide a bridge to a renewed ownership structure.
On the part of investors, GP customers come with one of two motivations: either as a traditional “buy and hold” investment in the manager to get the long-term economic advantage of the manager, or as part of a wider coordination game that can facilitate the expansion of new asset classes, sales, markets or strategies.
GP funds as an asset class offer an attractive combination of income, capital appreciation and limited protection. Preqin estimates that the total business value of private GPs markets will double from $1.7 trillion in 2024 to $3.4 trillion in 2030, and that market growth supports the financial appreciation as well as the performance of individual GPs. Investors who build GP portfolios can also benefit from strategic and geographic diversification while earning income from each firm’s management and administration fees.
Sorting Methods
While the rationale behind GP’s investment strategy varies from manager to investor, the deals themselves are highly recommended and continue to evolve based on market demand. When issuing seed money, new managers will often require the GP investor to make a firm commitment at the same time to a new, existing or future fund managed by the GP. Similarly, more mature GP deals also include some commitment to the management company with significant commitments to raise funds in the future. However, the terms of these agreements vary and are subject to change, depending on the strategy, where the manager is in his life and how much power the investor has in the negotiations. Other technical requirements can also drive structural requirements, such as tax considerations or the growing use of “feeder” for insurance company investors, who may want to make their LP and GP commitments with the same limited vehicle. These deals typically involve restructuring of the manager or fund to avoid triggering the LP’s approval and to avoid the investor’s exposure to the GP’s public announcements.
One of the biggest changes seen in GP investing over the past few years has been the advent of a more active investment philosophy. Gone are the days when investors were content to come in, contribute money, contribute to the management fee and carry the economy and enjoy the LP’s enhanced returns. Now, it is unusual to see even 10% of the funds coming in alone, when GP customers want to participate more with negotiation rights and negative approval rights regarding important strategic decisions and new lines of business or starting funds. As such, these agreements are increasingly restricting the manager’s ability to be fully independent as GP investors become more sophisticated and involved in the effective management of their investments in, and strategic partnerships with, GP.
Take Chances
Monetizing GP investments has been a challenge for investors, as there has traditionally been no existing GP equity market to provide a natural exit. Although second-party activity has started to emerge recently, and we have seen private equity funds become more active in the GP market, ensuring that the path to investment returns is still an important point of discussion in GP matters.
For example, although in the past 15 years it was common for GP investors to accept that the income shares will continue for the life of the manager without the planned amount, as the market grows, we have seen more desire to negotiate exit arrangements such as sales or putting rights at the beginning of these agreements. Such financial mechanisms have been built into agreements over the past ten years, and now we see whether investors will use them or use them as an opportunity to negotiate an alternative exit. As these rights develop and investors and GPs come to terms with the implications of these exit rights, we expect to see further innovation continue to strike a balance between investors’ liquidity needs and GPs’ desire to create sustainable capitalization structures.
Market Outlook
As we enter 2026, the growth we have seen so far in the market for GP figures shows no signs of slowing down. With both GPs and investors realizing the power of GP stocks as a tool to meet the financial and strategic needs of asset managers, increased familiarity can continue to boost performance. With no major economic fears affecting the performance of private equity managers across the board, we don’t expect to see this market slow anytime soon. In addition, as more players enter the market, we expect the continued regulatory processes demanded by GP investors, leading to increased complexity as investors and GPs continue to create bespoke solutions to suit their needs.
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