Why we chose to invest off our own balance sheet rather than raise a fund — and what that changes in practice.
A fund has a clock. From the day it closes, every decision is made against a date on which the capital must be returned. In a good market that discipline is useful. In a bad one it is corrosive: it forces sales at the bottom, discourages maintenance capital expenditure in the final years of ownership, and quietly shortens every management team's planning horizon.
We have chosen to invest the partners' own capital instead. It makes us smaller and slower than we could otherwise be — we cannot write a cheque larger than our own balance sheet, and we cannot do six deals a year. What it buys us is the ability to say to a management team, honestly, that we have no date by which we must sell.
In practice that changes three things. We approve maintenance spending that a fund in year eight would defer. We let a cyclical business sit through a bad two years rather than selling into weakness. And we can be the buyer when a fund that is out of time has to be the seller.