From Founder-Led to Institutional: The GP Solutions Roadmap

GPs have never had more options for bringing on outside capital. GP solutions—once associated almost exclusively with distress—have evolved into a sophisticated toolkit for growth, succession, and scale.

In a recent episode of The Distribution by Juniper Square, host Brendan Sedloff sat down with Drew Murphy, partner at Berkshire Global Advisors, to map the full arc of the GP solutions market. Murphy has spent nearly two decades advising middle-market investment firms, and the picture he painted is one of a market that has moved decisively from niche to institutional. 

The data support that view. GP stakes and GP M&A transactions reached record levels in 2025, with deal volume increasing 40% year-on-year. And the pipeline is widening: 77% of global GPs plan to make a GP-stake divestiture in the next 24 months. 

His core thesis? The firms securing premium valuations today are those that have successfully transitioned from founder-led shops into repeatable, scalable institutional platforms.

Murphy traced the origins of the GP solutions market to the early 2000s, when the first minority stake transactions were structured around hedge funds. After the financial crisis, private credit and private equity managers offered the durability that hedge funds couldn't guarantee. By the mid-2010s, deal volume was accelerating, with a wave of institutional GP stakes funds formalizing what had previously been ad hoc. Post-COVID, the trend line has shifted sharply toward the largest platforms growing even larger through both minority partnerships and outright control transactions.

Today, the market offers four distinct entry points:

1. Seeding: Institutionalized capital now exists to back firms at launch, providing LP commitments, equity stakes, and working capital.
2. Financing: The use of debt, preferred equity, or other non-dilutive tools to fund GP commitments or team expansions. This segment has grown significantly as a cost-effective alternative to selling equity.
3. Minority stakes: Often occurring around Fund IV or V, these involve selling 10% to 25% of the equity to GP stake funds, sovereign wealth funds, or financial institutions.
4. Control transactions: Affiliating with a larger organization to access broader distribution channels, such as retail or insurance capital, that are difficult for an independent firm to penetrate. 

The stigma once attached to all of these, Murphy argued, has largely dissolved. "Managers are pursuing them for growth purposes," he said. "It's really how do you accelerate growth or solve for what is maybe an internal issue that needs an external response.

Preqin estimates the total enterprise value of private markets GPs will double from $1.7 trillion in 2024 to $3.4 trillion by 2030. At that rate of expansion, the managers most likely to command premium multiples are those demonstrating not just performance, but institutionalized, repeatable growth. To understand a firm's worth, Murphy breaks down enterprise value into three primary components:

• Net fee-related earnings (NFRE), which functions like EBITDA on the management fee business
• Carried interest from existing and future fund vintages
• The balance sheet, which reflects GP commitments and co-investment exposure.

In today's market, NFRE multiples generally range from the mid-teens to the mid-20s. However, these premiums are reserved for firms demonstrating 15% to 25% forward growth through successive fund step-ups or product diversification. “The multiple ultimately reflects the growth rate. The higher the multiple, the higher the forward growth rate should be," he said.

Murphy also identified four variables that buyers consistently weigh. People—are the key contributors locked in and appropriately compensated? 

• Fund succession—is there a credible path to successive funds, ideally with a step-up in size each vintage?
• Product diversification—can the firm introduce complementary strategies or access new geographies?
• Operating margin—can growth actually reach the bottom line? 

He was direct on the last point: operating margins north of 50% are achievable at scale in fund management, and independent managers with a clear path from 35% to 50% tend to have very different valuation conversations than those with flat or declining margins. But Murphy also warned against short-term optimization.

Sophisticated buyers look for a durable margin. Cutting investments in talent or infrastructure just to inflate margins ahead of a transaction is a "red flag" that rarely survives due diligence. A premium valuation requires an infrastructure that is already at market rate and capable of supporting future scale.

One of Murphy's sharpest observations was about the gap between how GPs manage their underlying investments and how they tend to manage their own businesses.

"Often groups are so good at managing the underlying investments," he said, "they don't turn the lens around on their own firm."

In a transaction process, buyers notice. They look for whether the firm has separated the CEO, CIO, and head of capital raising functions, roles that at the founding stage often collapse into one person, but that any institutionalized platform needs to carry distinctly. They examine whether capital raising is a team effort with a defined channel strategy or still depends on a single relationship network. They assess compliance infrastructure, fund administration quality, and operational risk—the kind of table-stakes diligence that, Murphy observed, is only getting more scrutinized as the industry matures.

His advice for founders thinking about a future transaction? Run your business as if nothing is going to happen. Make the investments in people and infrastructure now, not in anticipation of a deal. Buyers can tell the difference between an organization built to last and one trimmed to optimize a short-term margin. The former gets premium partnerships. The latter gets difficult diligence conversations.

The same principle extends to timing. Murphy stressed that the best outcomes come from GPs who think through the questions long before they're in a process: Where are we in our fund life cycle? What do we actually need from an outside partner? What are the internal pressures—succession, cap table evolution, distribution access—that a transaction could address? 

"It's not something you want to wait for at the end," he said.