Originally published in The Deal.

Are the days of the traditional private equity firm over? Over the past several years my colleagues and I have helped some of the largest private equity firms transition into more broad-based asset managers. This transformation is occurring in a myriad of forms. Many of the biggest private equity shops are diversifying their platforms by offering new, complementary products, such as closed-end funds, Business Development Companies (BDCs), and hedge funds. At the same time, fixed-income firms are diversifying into private equity. This trend is being driven by several factors and presents both challenges and opportunities for dealmakers.

The End of the “Private” in Private Equity -

The “private” in private equity is eroding. For most private equity firms the SEC registration deadline has passed. Private equity firms (and LPs) have already begun reporting performance and other data that used to be considered proprietary, and the registration process will only increase disclosure. The implementation of the Volker Rule will also provide firms with the opportunity to acquire expertise from the larger banks over the coming years. Many firms have created internal legal, compliance and accounting capabilities that didn’t exist in the “early” days of the industry. Firms have expanded their focus beyond balance sheet optimization to value creation – often employing industry experts or creating their own in-house consulting firms. This infrastructure adds expertise but comes at a cost. New products offer a way to grow and diversify a firm’s funding sources and revenues while also expanding a firm’s brand.