Private equity is a difficult business. In order to get started, one has to raise capital but, in order to raise capital, one must showcase a track record of success. In the past this was done very slowly, with the private equity executive hopeful brokering small deals in an effort to build credibility in the industry before moving up to larger and larger deals. That is a tough, long road for anyone to walk. It is made even more difficult in today’s market where the competition is as fierce as it has ever been and, therefore, prices are through the roof. The new entrant to the world of private equity is beaten out by bigger firms before he can even get out of the starting gate. So what is he or she to do?

An interesting direction some entrants into the market are taking when they find a deal but are unable to raise capital themselves is to broker the deal out to a larger firms, acting as a “fundless sponsor” for the deal. These deals have become more and more prevalent in the world of private equity over the past five years. In fact, according to Michael B. Shaw, a partner in the Chicago office of law firm Much Shelist PC, the number of “fundless sponsor” deal has doubled since 2009.

That is not to say just anyone can broker these deals and act as a “fundless sponsor.” In many of these cases, the deals are being brokered by private equity executives who have decided to leave their company and strike out on their own. They usually have the benefit of knowing many people in the private equity world and have an area of expertise that would rival anyone in the industry who is currently working for a private equity firm. Because of these connections and level of industry-specific knowledge, these emancipated executives are able to act as a middleman between a business and a private equity firm. They get noted as the “fundless sponsor” of the deal and can reap great financial reward, besides the track record they build for when they look to raise capital for future deals.

Will this mode of interaction between businesses and private equity firms persist into the future or is it just a fad? In the mind of some professionals, these “fundless sponsor” brokered deals will continue to grow because it is becoming increasingly difficult for firms to find deals on their own. If they allow these freelancers to bring the deals to them, firms can actually save money, in some cases. So, perhaps these “fundless sponsors” are here to stay.