As a leading fund investor in the lower middle market buyout arena, RCP Advisors frequently has the opportunity to make direct co-investments in transactions sponsored by top tier equity sponsors. These sponsors may be a GP with which RCP has an active investment relationship or other high quality sponsors operating in the lower middle market. RCP finds these co-investment transactions attractive for a number of different reasons. First, they are sourced, fully diligenced (underwritten), and managed by sponsors with track records of success. In collaboration with the sponsor’s due diligence process, RCP performs its own due diligence and chooses whether or not to invest in a transaction. In addition, RCP typically has preferred economic terms with respect to these transactions where it is not subject to management fees or carried interest paid to the sponsoring GP.
RCP enjoys a number of advantages as a private equity co-investor. First, through its many relationships in the lower middle market, RCP believes it is well positioned to source attractive deal flow. Secondly, RCP has a history of success in this field, a thorough and rigorous investment process, and an experienced portfolio manager who is dedicated to RCP’s co-investment activities.
In turn, RCP believes that middle market sponsors find RCP to be an attractive co-investment partner. Although RCP’s investment process is rigorous, it is also responsive, transparent, and reliable. RCP works in partnership with the sponsoring GPs to execute on the most attractive buyout transactions.