Why ‘smoke and mirrors’ won’t cut it during fundraising

Sep 10, 2026

Young Lee, managing director at Abbott Capital, evaluates private-market managers and portfolios. Jack Purcell, managing partner at Ridgemont Equity Partners, brings 25 years of partnership and investment experience. They explore fund growth versus strategy drift, credible valuations, genuine operating expertise, secondary sales, personnel changes, and why succession planning is crucial during fundraising.

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INSIGHT

Why Larger Funds Can Weaken An Investment Thesis

LPs generally view larger funds skeptically because growth can force a manager into a different strategy and sourcing model.
A doubling of capital may require new experts and operational capabilities that the original team has not proven.

INSIGHT

Scale Helps GPs But Compresses Returns

Fund growth can signal organizational progress while funding capabilities that improve portfolio support and returns.
Young Lee cautioned that larger funds usually produce less volatile, more compressed outcomes than lower-middle-market funds.

INSIGHT

Operating Partners Need More Than Impressive Résumés

Operating partners create value only when they are effective investors and give CEOs room to lead.
LPs often see “smoke and mirrors” when firms showcase operators without using them well.

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Clear succession plans, steadily growing fund sizes, realistic marks and genuinely effective operating partners are among the things LPs need to see from a GP before making an allocation in the current environment.

That’s according to Young Lee, a managing director at New York-headquartered fund-of-funds manager Abbott Capital, speaking on the latest episode of PEI Group’s Commitment Issues podcast series. The episode, hosted by PEI’s Chris Witkowsky, addressed the perennial topic of private equity fundraising, with Lee noting that from an LP’s perspective, “almost always a bigger fund size is bad”.

“We would love the same thing every time, people still being happy even though they’re making the same amount of money,” he said. “[Because] what we’re looking for really is whether the GP is staying in their strategy.”

Jack Purcell, a managing partner at Charlotte, North Carolina-based Ridgemont Equity Partners, countered that “some growth is a sign of progress” for GPs. Not only does a bigger fund size “communicate progress and the vibrancy of the partnership externally to investors and other counterparties”, he suggested, but “the ability to have a critical mass of assets under management and fee income to invest” matters too.

Meanwhile, on the topic of value creation, Lee warned that while “a lot of LPs focus a lot on the operations side and often value the partners who have operating experience”, this can sometimes equate to “smoke and mirrors”, where “either they’re not effective people or GPs aren’t using them effectively”.

Finally, Purcell and Lee agreed on the urgent need for more detailed succession planning at the GP level. “The amazing thing to me is that, for an industry comprised of really competitive, really smart, Type-A people who plan everything – plan their day, plan their hour, plan the minute – to not have a plan is almost comical,” Purcell said.

The views, opinions, and statements expressed by the individuals in this episode are their own and do not necessarily reflect the views, opinions or official positions of their firms or their affiliates. Nothing in this episode should be construed as investment, legal or tax advice, or as an offer or solicitation to invest in any fund or vehicle managed by the firms or any other party. Statements regarding past performance are not indicative of future results.