It was August 2023, and Matt Swain had 5 gives on the desk for Triago, the corporate the place he’d just lately ascended to CEO. He’d constructed the mightily worthwhile franchise in an obscure nook of personal fairness referred to as “directs”—primarily pairing solidly run companies that wished to promote, with household workplaces searching for outsize returns. Now, suitors comprising prime banks from Spain and Korea, a number one U.S. personal fairness agency, a serious Midwestern lender, and a large Asian buying and selling home had been circling.
Swain didn’t anticipate a lot. “I didn’t even wear socks with my loafers. I never wear socks at any casual, inconsequential meeting,” he remembers. “I just wanted to get veteran Bob’s advice on which offer to pick.” At breakfast, the hyperkinetic teenager quizzed the silver-coiffed, soft-spoken Hotz, who’s a half-century his senior. “Given the time limit, I was talking so fast I didn’t even touch my usual avocado toast. I asked Bob: ‘Which one is the right fit?’ And Bob does a total flip, and says, ‘I think we’re the best partner.’”
At 11 p.m. on Wednesday, Aug. 30, Hotz referred to as Swain to declare he was in—however solely on the situation that Swain go away his home filled with company on Nantucket and fly to London the Sunday of Labor Day weekend for a rapid-fire session of due diligence. Swain agreed and boarded the red-eye to Heathrow toting a bulging curler suitcase packed filled with financials. By the next Friday, Houlihan Lokey had clinched the whirlwind buy, reportedly for properly over $100 million.
The wedding created a drive to observe on Wall Avenue, between a whiz child with a knack for dealmaking, and the large mid-tier funding financial institution you’ve in all probability by no means heard of. In his early twenties, even earlier than becoming a member of Triago, Swain beat the Wall Avenue professionals in recognizing that the burgeoning wealth of household workplaces meant there was excessive curiosity in buying particular person firms, slightly than investing in “blind pools” of enterprises assembled by the personal fairness (PE) giants.
The founders of these household workplaces had typically constructed and offered their very own firms, they usually and their heirs relished “kicking the tires,” as a substitute of getting a Carlyle or TPG determine for them. To fulfill that urge for food among the many super-wealthy, Swain developed a large community of venturesome “independent sponsors,” operators that obtained letters of intent to buy personal, midsize companies that did all the pieces from making routine airplane components to advertising Disney-branded souvenirs at a predetermined worth.
That course of the place traders cherry-pick their very own offers slightly than, say, becoming a member of fund No. 7 of a PE colossus, is known as “directs.” It’s existed for many years, however in his 5 years at Triago, Swain has proved the prime mover in taking the sector from backwater to large enterprise, and have become king of the realm. By Fortune’s estimates, drawn from trade knowledge, the worth of all direct offers, utilizing the broad definition of single investments in personal firms, will explode to one thing like $200 billion this yr, a number of the quantity a number of years in the past.
Nonetheless, “directs” have a option to go earlier than they pose any type of actual risk to the PE giants. Although Swain has large plans, there has but to be mass adoption by the normal stalwarts of PE—the massive pension funds, insurers, and endowments. These enormous establishments nonetheless overwhelmingly select swimming pools, the place they’ll put tons of cash to work shortly with out specialised groups wanted to parse these bespoke offers. In the meantime success attracts competitors—and Swain’s fats returns (garnered by shopping for and fixing low-cost, ignored, small and midsize firms) are attracting increasingly more rivals, a development that would hike costs and scale back earnings.
However no challenges appear to faze Swain, who has developed an enormous Rolodex that includes the funding arms for the clans of late actual property magnate Sam Zell and ambassador to the U.Okay. Warren Stephens, plus the Romneys and Bloombergs, amongst a panoply of luminary names. He proved an knowledgeable at curating a forged of prime sponsors and figuring out the investments that promised—and some years later delivered—large, PE-beating returns. “Pre-Matt, we had to find the independent sponsors, and it was difficult,” says Duran Curis, founding accomplice at Ocean Avenue Capital Companions, who manages a $2 billion portfolio of 140 directs. “His big contribution is that he finds them for us, and presents the best opportunities.” Now, paired with the muscle of Houlihan Lokey, Swain has large plans to start out promoting to pension funds, endowments, and asset managers.
Provides David Feierstein, cofounder of Ronin Fairness Companions, an funding agency for which Swain’s raised a number of hundred million {dollars} to fund half a dozen purchases, “If you didn’t have someone as aggressive and charismatic as Matt, the directs industry wouldn’t be nearly where it is today. Matt had the first mover advantage. In directs, Matt runs the show.”
The attraction offensive
There’s one thing uncommon about Swain, who’s a younger brainiac, however one who has constructed his enterprise the old school, pre-quant-trading and Excel fashions Wall Avenue approach, through attraction offensives that weave webs of tight relationships few rivals can match. It’s outstanding that this super-hustler comes from a extremely privileged background. He grew up in Greenwich, Conn., son of the CFO of a distinguished hedge fund. His ancestors had been the unique homeowners of Nantucket island. “Matt tells me his family had been coming to Nantucket for generations. So we’re walking to get coffee and we pass Swain Street, then Swain House, then we go to the Whaling Museum and get greeted by half a dozen portraits of his forbears,” says Rupert Edis, CEO of the Landon household workplace that features Landon Capital Companions, a long-standing investor in Swain’s directs.
After graduating from Colgate College, the place he served as scholar physique president and starred in squash—he’s nonetheless among the best beginner gamers in Manhattan—Swain joined Stifel, in a “placement agent” unit that raised cash for hedge funds. The managers had been amazed that household workplaces weren’t returning their calls, so that they assigned Swain to seek out takers from a “dead list” of 1,000 largely rich clans. The inexperienced recruit bought largely noes, upbraidings, and even a “You’re a midget!” from the respondents who didn’t grasp up, however he additionally discovered there was a spot out there.
Swain performed matchmaker. He discovered that impartial sponsor IVEST wanted funding for an opulent toy purveyor referred to as Dan Dee, and introduced their leaders to Solamere, the household workplace representing the Romneys, former Walmart CEO Lee Scott, and different rich traders. Swain raised $100 million to notch the acquisition. By 2018, he discovered a spot that was simply small and daring sufficient to take a flier on his imaginative and prescient of constructing an entire enterprise round directs: Triago, the agency based by Frenchman Antoine Dréan that did a thriving commerce in an in depth cousin, discovering consumers for restricted companions (LPs) that sought to promote their stakes in personal fairness swimming pools.
Swain shortly turned directs into Triago’s revenue driver. Over three years, he raised $3 billion in fairness capital for 35 offers that, together with debt, backed over $10 billion in purchases. In April 2022, Dréan named his 27-year outdated comer as CEO.
Whereas Huge PE usually delivers twofold returns to traders over an extended holding interval, directs intention far larger. “Our investors are looking for returns of 3x or more,” says Patrick Zyla, managing director of Fortress Harlan, a agency that Swain has labored with extensively.
Common PE funds famously cost round 2% a yr on all traders’ funds, whether or not or not they’ve been put to work but. The directs sponsors usually don’t cost any charges in any respect, and even higher, don’t receives a commission except they ship big-time. The trade’s giants often get a hard and fast “carry” of 20% of earnings when firms are offered. However directs offers are often structured in order that the sponsors garner zip till they hit a 2x bogey. Over that quantity, they begin gathering 20%, however their take accelerates sharply with every a number of of their traders’ stake they return. If the sponsor-managers hit 5x, they’ll pocket as a lot as 40% of the achieve.
“If you didn’t have someone as aggressive and charismatic as Matt, the directs industry wouldn’t be nearly where it is today.”David Feierstein, cofounder of Ronin Fairness Companions
Sam Zell, who alongside along with his staff funded quite a few Swain’s offers, completely cherished this ultra-“skin in the game” facet of directs. (Swain relates that Zell favored having his picture snapped alongside the teenager, as Swain was solely barely taller than the late bantam tycoon.) Zell and the president of the Zell household workplace EGI, Mark Sotir, would push Swain to rearrange transactions that raised the bar for capturing a share of the earnings, however gave the administration groups a fair greater rating for fabulous outcomes.
That makes Houlihan Lokey’s pitch notably interesting proper now, on condition that PE has seen a pointy drop-off in exits: In keeping with Hamilton Lane, a agency that invests on behalf of pension funds, as of 2021 PE corporations had been nonetheless holding 45% of their buyout offers 5 years following their buy; final yr, round 65% had been nonetheless sitting unsold after a half-decade.
In the meantime Swain’s mannequin thrives on pace. With directs, the cash comes quick, and so do the charges. It usually takes placement brokers engaged on behalf of PE corporations 9 to 18 months to boost a full fund. However as soon as the Swain gang will get a mandate from a sponsor, he and his bankers usually make the rounds and safe the funding in eight to 9 weeks. His staff of 40 additionally concentrates on greater and larger offers that swell their take from the common directs transaction. This yr, he expects to do round a dozen offers at a mean enterprise worth of $200 million to $400 million. “That’s much, much bigger than the average in the industry,” he avows. “We’re now working on one worth $2 billion, and the numbers will keep climbing.”
That expanded holding time, and LP thirst for liquidity, ought to particularly profit the primary discipline the place Swain and Houlihan Lokey envisage large enlargement past conventional directs: so-called continuation autos, or CVs, the place a fund tags an excellent firm promising nice issues, and doesn’t wish to promote because it exits the opposite holdings. Immediately, Evercore is the largest participant, however Houlihan is rising. CVs money out many of the present LPs in that star “keeper” at return, and change them with a recent crop that sees large beneficial properties forward by maintaining and rising the standout for one more, say, three or 4 years. The corporate spins off from the fund and continues as a stand-alone. The newcomers are as soon as once more going “direct” since they’re procuring on a deal-by-deal foundation.
The second offshoot is what’s referred to as “co-investment.” PE corporations more and more search to boost cash past what the unique traders contributed to a given fund. Say the managers see a software program supplier on the block at a discount worth, and wish to add it to a tech portfolio. Or the “concentration limit” on anyone buy is $300 million, they usually’d hate to overlook out on an ideal match at $450 million. Or the aim could also be clinching an enormous add-on acquisition, or satisfying an unexpected surge in gross sales by developing new crops. In all these instances, the fund could lack the capital for seizing the chance. It could have $300 million nonetheless in its coffers and wish a few hundred million extra.
Swain and the Houlihan Lokey staff view the realm, nonetheless in its infancy, as an enormous discipline for profitable fundraising and investment-banking enterprise. It’s deal for the fund LPs as a result of they pay no payment or stick with it the extra capital. The brand new traders pay carry at a fee that’s carefully tied to efficiency: The share begins low and rises relying on the extent of revenue achieved. The association empowers the co-investors to choose and select their very own particular person offers, the good lure of directs generally.
As a substitute of coming from the small sponsors that Swain has primarily represented previously, these alternatives are flowing from large, established PE outfits which have run these candidates for years, and might present spectacular monitor information, each for the co-invest property and the agency’s general efficiency. That imprimatur significantly heightens their enchantment.
“A commercial thought every minute of every day”
At Houlihan Lokey, Swain persists within the headlong roundelay of networking that’s his calling card. He does most of his enterprise in a five-block radius of Midtown Manhattan. He resides in a Moorish-themed, Park Avenue high-rise, the place he rents an condo from Eric Trump; Ivanka Trump is his neighbor. Swain does his main dealmaking at two close by eateries, tony French venue Le Bilboquet and the LoewsRegency Bar & Grill. “I do back to back breakfasts at Loews, then a lunch at Bilboquet,” he avows. “Then in the evening it’s three chapters. First a cocktail at Bilboquet, then a real dinner, then an elongated catch-up over drinks. Before I hit 30, it would stop at midnight. Now that I’m 30, it’s over by 11:00 or midnight.” Within the pursuits of effectivity, Swain modifications tables when the brand new visitor arrives, even when the outdated visitor continues to be sitting there. Notes Tom Burchill, managing accomplice of PE agency Seven Level: “He bounces from one pole to another. Once, I got him for 45 minutes at Bilboquet. Lucky me.” When on Nantucket, Swain zooms across the island in a hard-bottom, Navy SEAL–type, super-high-speed raft, a sort deployed by the army in Ukraine. He had it imported, and the cash went to a producer seeking to assist jobs within the beleaguered nation.
His enterprise associates view him as each blithely charming and, in a phrase, obsessed. “Matt thinks a commercial thought every minute of every day,” observes Hotz, whom Swain reveres as “Uncle Bob.” Provides Mike DiPiano, managing common accomplice at tech PE agency NewSpring Capital: “He’s a young man selling at all times.” His potential to draw prime older notables is outstanding. “He’s got this old soul for a young guy, and it’s infectious,” says Kevin Wilcox of the Stephens household workplace. Edis, of the Landon household workplace, praises Swain’s knack for “attracting powerful mentors and allies” and calls his potential to perform duties in a jiffy as “Napoleonic”—at 5-foot-8, by the way in which, Swain is midsize, like the businesses he markets.
Although Houlihan Lokey purchased Triago 18 months in the past, all sides is already bringing the opposite large advantages. It’s astounding that the agency is so little identified. Houlihan ranks because the world’s largest funding financial institution for midsize personal firms. It’s additionally been the highest performer on Wall Avenue for rewarding traders over the previous decade, and by lots. In that span, it’s delivered complete shareholder returns of 26.4% a yr, beating such fellow boutiques as Lazard (5.9%), Jefferies (13.2%), Moelis (17.2%), and Evercore (22%), whereas additionally waxing large guys Citigroup (9.3%), Financial institution of America (14.5%), Goldman Sachs (18.0%), Morgan Stanley (19.9%), and J.P. Morgan (20.3%). Again within the fall of 2015, Houlihan’s market cap trailed these of Jefferies, Lazard, and Evercore. Now at $13.6 billion, it’s greater than all three.
A serious plus when it comes to the synergy on the newly mixed firm: the directs funding, fund funding, CVs, and co-investments originating from Houlihan Lokey’s PE purchasers. In 2023 Atlas Service provider Capital, a mixed hedge and PE fund headed by former Barclays CEO Bob Diamond, labored with Houlihan as its advisor to MarshBerry, in a big fund funding for that main platform within the insurance coverage brokerage house. Diamond is a Swain fan and was one of many Triago bidders. Now that Swain has joined Houlihan, Diamond is giving the agency enterprise on each the fund funding and directs sides; he’s just lately engaged the Swain staff on securing follow-on capital for Atlas portfolio firms.
The CV connection can be spouting advisory charges for Houlihan Lokey. Final October, Swain raised the cash for PE fund NewSpring, famend for scoring large from shopping for Nutrisystem within the 2000s, for a automobile that mixed two of its star portfolio holdings. “You realize that if you could just hold these investments longer you’ll get much more out of them,” says cofounder DiPiano. Over sundry cellphone calls, Houlihan supplied funding banking steerage to the household workplace traders, parsing the transactions’ professionals and cons.
In co-invests, Riverside, a $14 billion PE agency that had been a Houlihan Lokey consumer for years however by no means labored with Triago, was in search of further co-investment fairness as a option to appeal to new restricted companions and shut on two recent investments. Through the Houlihan connection, in stepped the Swain staff. “We were introduced to dozens of LPs in short order, and secured investments from a number of them,” says Peggy Roberts, a managing accomplice on the agency. “Partnering with Houlihan has helped us forge sustained relationships with firms we would not have met otherwise.”
Up to now 9 months, Houlihan has raised over $500 million to safe three purchases for Swain’s stalwart buyer Ronin. In June, the Swain contingent supplied Ronin the funding to purchase an organization that repairs and overhauls programs for industrial plane. Houlihan performed evaluation on behalf of the household workplace traders. In April, Landon Capital Companions (LCP) scored an enormous hit through the sale of its portfolio holding, Wisconsin cheesemaker Heartisan Meals, the place it partnered with Ronin on a deal by which Triago had raised the cash. By means of the Swain hyperlink, LCP has awarded Houlihan two mandates, one for a debt financing of a portfolio firm, and one other to discover a sale.
Early this yr, the directs franchise collected $75 million in fairness and debt for Seven Level to purchase Frazier Aviation, producer of structural components for army plane. Now, Seven Level is strongly contemplating Houlihan Lokey to supply the mark-to-market valuation evaluation of its portfolio holdings to ship to traders.
The rewards additionally go the opposite approach. Liberty Corridor, a PE sponsor targeted solely on aerospace and protection, is a long-standing Houlihan Lokey consumer, and had employed Triago earlier than the acquisition to guide a CV. The tie-up has additional deepened its Houlihan relationship. Liberty Corridor employed Houlihan to boost the capital for a basic direct that closed earlier this yr. Between the CV and direct, Houlihan secured $250 million for Liberty. It’s additionally working with the Houlihan M&A bunch to hunt new purchases.
Edis, chief of the Landon household workplace and a protégé of its founder, the late swashbuckling billionaire Timothy Landon, who’s legendary because the chief political advisor to his army college chum, the sultan of Oman, notes that Swain offers Houlihan Lokey an additional edge. “Matt’s been crucial in upselling Houlihan’s other services. As investments move through their life cycle, they need M&A, debt refinancing, and finding buyers for the final sale, and the natural thing for one of Matt’s companies is for Houlihan to take on that work,” says Edis. “We’re doing a new refi with Houlihan because of the cycle that began with Matt.”
In April 2025, the agency promoted Swain as co-head of its fairness capital options group. The unit encompasses each the fairness and debt fundraising franchises; in keeping with sources on Wall Avenue the group generates $400 million to $500 million a yr in income—that’s as a lot as 1 / 4 of the $2.4 billion the agency posted in fiscal yr 2025, resulted in March.
Swain’s part is extremely profitable. From trade sources, Fortune estimates that at an annual run fee, the three directs areas mixed—the normal selection, CVs, and co-invests—are elevating properly over $5 billion a yr. From finding out this extremely fragmented trade, Fortune concludes that Houlihan Lokey leads the sector in mixed basic directs and CVs; in directs alone, it holds a market share of round 10%.
For Swain, the rise of directs presages nothing lower than a revolution on this planet’s monetary markets. “In the future, more and more institutional investors like pension funds and endowments will follow the family offices in buying individual companies, just as investors pick stocks. Instead of investing in a pool, they’ll invest directly into a company’s equity,” he declares. “In other words, directs will make the private market for companies much more liquid so that it looks like the public market for stocks.” Swain predicts that inside a decade, the whole dimension of the three lessons of directs might be attracting the identical annual quantity of latest funds as conventional PE instructions at the moment.
“In the future, directs will make the private market for companies much more liquid so that it looks like the public market for stocks.”Matt Swain
Already the Ventura County Workers’ Retirement Affiliation is launching a program that can spend as much as $20 million on directs co-investment this yr, and the Texas Municipal Retirement System plans to dedicate as a lot as $15 billion over the following 5 years, including additional development capital to particular person holdings in PE funds. “The large pension funds are migrating to smaller managers in the lower-middle-market and middle-market space because that’s where they’re seeing the highest returns,” says a number one funding advisor to the PE trade.
Swain’s PE clients reward his analytical abilities in figuring out probably the most promising offers. “He did intense due diligence on the Frazier Aviation deal, where we’re sponsor,” remembers Burchill of Seven Level. “When Matt goes in front of investors and says it will be good, they listen to him. His credibility helped give us our choice of investors.”
The golden little one has developed his personal extremely authentic strategy in trawling for revenue—even on the streets of Manhattan, the place you’ll by no means discover him inside a taxi. “No matter how hot or cold it may be, Matt will say, ‘Let’s walk. It’s better for networking,’” marvels Hotz. At some point in September, this author joined Swain on considered one of his excursions down Park Avenue, and on cue, he bumped into Jack Oliver, who heads the PE agency Finback, alongside former Florida Gov. Jeb Bush. Two of probably the most outsize personas in personal fairness held their very own little curbside summit, rapping on how they could join on offers. I later requested the super-personable Oliver whether or not he or Swain is the extra magnetic presence. Riposted Oliver: “I’d have to say I have the bigger personality. But he’s more successful.” One factor’s for certain, in a enterprise that thrives on relationships, Swain won’t ever cease working the room, the block, the island, the world, to carry deep-pocketed traders into his personal nook of Wall Avenue.
