Oversubscription Overkill


Buyout shops are constantly advertising the fact that their funds are oversubscribed. One need look no further than the headlines on some of the press releases they send out over the wires.

But oversubscription might not be deserving of much bragging. For every oversubscribed fund, there’s at least one limited partner that didn’t get to put all the money to work that they wanted to. Or even worse, maybe they were turned away from the fund altogether. To be sure, when funds are oversubscribed, there are fires that need to be quelled, lest bridges get burned.

I am currently writing a story for Buyouts on the issue of oversubscription, covering it from a placement agent’s point of view. I’m particularly interested in the tactics they use to reduce the tension than can build up in overheated fundraises, and what the consequences are if they fail.

Comments are welcome. Please either respond directly to this posting or email me at ari.nathanson@thomson.com