Private Equity By Name - But No Fund?

It's a fundless sponsor, which means they don't have any committed capital or AUM. To get deals done, they leverage relationships with banks to finance the deal. In addition, as CaptK said, they can also leverage investor relationships (which includes PE firms with committed capital) to provide the equity required to get the deal done.

One very good example of a recent acquisition by a fundless sponsor is the acquisition of TV Guide by Opengate for $1 (one dollar). TV Guide was hemorrhaging cash and the parent (Macrovision) just wanted to get rid of it. Given that there would probably be significant restructuring costs and negative cash flow, Opengate most likely had a lender provide the working capital required to turn the business around. If this is the case and they didn't need to bring in outside equity investors to fund working capital, they get to keep all of the upside if they are successful.

However, in a situation where a business is being purchased at some multiple of revenue or EBITDA, the fundless sponsor will need to bring in an outside investor to fund equity. Since the fundless sponsor essentially sourced the deal for the equity investor, they'll take a success fee if it closes. In addition, if the deal is successful, they usually get a piece of the upside (options).

From my experience, fundless sponsors usually have an angle when they look at deals. When they pitch deals to me, the fundless sponsor usually already has a team of consultants or operators engaged with very specific experience that qualifies them to evaluate the opportunity and even come in as the new management team post-transaction.. or the fundless sponsor has some "in" into the target that will allow the deal to get done much more easily.