A single deal is a bet. A portfolio is a strategy. These four principles guide most thoughtful allocators.
Per-deal sizing
Limit any single deal to five to ten percent of your private equity allocation. A single bad outcome should not derail your program.
Sector mix
Aim for exposure across at least four or five industries. Concentration in one sector amplifies cycle risk.
Vintage diversification
Spread commitments over three to five years. Vintage matters: deals closed at peak valuations underperform; deals closed in dislocated markets often outperform.
Sponsor diversification
No single sponsor should control more than a quarter of your private equity exposure. Sponsor risk is real and uncorrelated with company-specific risk.
If you are evaluating a transaction in this space and want a candid second look, Solender Capital is happy to compare notes. Reach out through our contact page and share what you are working on.