In an economy still recovering from COVID, many investors are looking outside the box to determine if pursuing a deal-by-deal approach to raising funds would be right at this time. Matt Ertman, Allen Matkins partner, says this approach provides more flexibility. Ertman shared various insights about the investment market as an exclusive with Connect.

Connect: When is a deal-by-deal approach a better route for an investment?

Ertman: I can tell you that for certain fund sponsors or certain investors, a deal-by-deal approach is better. When fund sponsors are looking for new capital, it can be easier to do it on a deal-by-deal approach. Working deal-by-deal allows you to attract investors because you don’t have deals crossed – investors aren’t tied to the other interests a fund may be pursuing.

Fund sponsors who don’t have a long track record really by default, in many cases have to take a deal-by-deal approach. Fund sponsors who do not have existing relationships with new investors often take a deal-by-deal approach because those investors won’t underwrite several deals using investors’ capital. But that investor may be willing to invest on an asset-by-asset approach because the investor will have insights into the deal in which the new capital is being called for and in some instances can do their own underwriting, and there is not as much trust that is required. Investment confidence has returned, though investors are mostly working with those they already know and trust.