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The man behind the continuation fund boom

If you’re a GP trying to figure out how to hold onto prized assets for longer, chances are you’ve had a call with Evercore’s Nigel Dawn.

There is a heart-warming moment towards the end of a promotional video for Newcastle University Business School in which Nigel Dawn, at the time the global co-head of UBS’s private funds group, speaks to students at his alma mater in the northeast of England.

In the 2013 video, Dawn says that where someone goes to school shouldn’t prevent them from career success. When the interviewer points out Dawn himself is an example of someone from a lesser-known business school who has made it to the top of global finance, Dawn looks a little embarrassed.

“It can be done,” he says. “It is possible.”

Dawn has come a long way since his days at Newcastle. Now the global head of private capital advisory at Evercore, he spends his time commuting between his office in Midtown, his apartment in Manhattan and a holiday home in Nantucket – sometimes by private chartered jet.

Top of the heap

Dawn has been instrumental in Evercore’s rise to the top of an industry that helps sponsors hold onto prized assets through continuation funds. According to data compiled by Secondaries Investor, Evercore was not one of the top three investment banks that dominated the market in 2014. In the years that followed, Cogent Partners, which was acquired by investment bank Greenhill in 2015, retained a comfortable spot at the top of the heap, buoyed by the explosion of multibillion-dollar deals involving sovereign wealth funds, financial institutions and pension funds repositioning their portfolios by selling off private fund stakes.

In 2019, Evercore overtook Greenhill as market leader, advising on $18.4 billion-worth of deals, and it has held the top spot ever since, per data compiled by Secondaries Investor. Despite the uncertainty caused by the covid-19 crisis, Evercore grew its year-on-year deal volume by 16 percent last year to $21.4 billion.

The buoyant secondaries market has allowed many advisory firms to flourish. Evercore’s success, however, is particularly enviable, according to conversations with dozens of market participants over the past 24 months.

“I was speaking to an adviser the other day who’d just lost out on a mandate to Evercore and he was like, ‘F*** man, we lost out to Evercore, again,’” a lawyer who advises on continuation fund deals told us in 2020.

Dawn_Nigel hi res_credit Evercore
Dawn: ‘You can’t just show up with the same ideas all the time’

In the past 12 months alone, Evercore has advised on some of the highest-profile continuation fund processes, helping the likes of General Atlantic, BC Partners, Hellman & Friedman, Leonard Green & Partners, Clearlake Capital and Summit Partners hold onto prized assets for longer while delivering liquidity to LPs who want it. Evercore has advised on nearly half of the 20 largest continuation funds to close, according to PEI data. That is a higher proportion than any other intermediary and more than double that of its closest competitor, PJT Partners. Transactions where GPs initiate processes on their assets more than tripled as a proportion of Evercore’s work last year, at 62 percent of total value, compared with 2015.

“The thing about Evercore is, Nigel’s just a deal-sourcing machine,” says an Asia-based managing director who competes with Evercore for mandates.

Market sources say that Evercore as a bank has a reputation for a cut-throat culture. One London-based market source says he often receives emails sent at 3am New York time from junior staffers in Evercore’s private capital advisory business. Late nights are synonymous with working in investment banking, and Dawn acknowledges that staff burnout is a real problem. Last year, his team worked “too hard, simple as that”, he said in an interview with us over Zoom in mid-August.

In some ways, Dawn’s rise to the upper echelons of this market is unusual. An Englishman in the very American-dominated world of private equity, Dawn has no interest in golf. He rarely drinks, and when he does, limits himself to one or two gin and tonics, say sources who know him. He also has a reputation for sometimes being a little tricky to interact with. When a reporter came out of a meeting with him several years ago at Evercore’s Midtown offices and asked his secretary if they had caught Dawn on a bad day, the secretary replied: “Don’t worry, he’s just British.”

But perceived prickliness appears to be balanced with a kinder side that shines through when the self-described diehard Sheffield United fan gets to know you.

“He’s a wonderful, generous man,” says an executive who worked under him. Dawn will always make a point to email the most junior team member on a group project directly to thank them for their work, as he knows it was likely the most junior associate who stayed up all night to finish a pitch deck, the executive says.

Market sources say that Dawn is the kind of guy who treats everyone with respect, who coached his daughter’s football team, who brought his young daughter into the office to sell Girl Scout cookies, and who uses his own money to match bonuses paid to administrative staff. When the Evercore team attended a pitch for a potential mandate in the unit’s early days, they drove there in Dawn’s minivan, one executive recalls.

“He has a traditional British personality,” says the person who worked under Dawn. “But when you get to know him, he’s very funny, very sharp, very kind.”

Lad from Sheffield

Born in 1964 into a blue-collar family in Sheffield in the north of England, Dawn grew up with an interest in politics. His father was a steelworker-come-postal worker, and his mother a nursery school teacher. Dawn’s brother went on to become a courier for a delivery company while his sister joined the police force.

“Not your classic investment banking background,” Dawn says, laughing.

As part of his undergraduate degree in politics and East Asian studies, Dawn travelled to China and undertook a year at Beijing Normal University. Upon graduating, he landed a job with Standard Chartered in 1987, working in Hong Kong and then mainland China where, in his words, he met a woman, moved to the US, got an MBA, started off in management consulting, and eventually wound up at UBS in 1997.

In 2003, Dawn worked on a landmark deal in which UBS sold $1.3 billion-worth of private equity fund interests held on its balance sheet to HarbourVest Partners. That deal eventually led to UBS deciding it could sell its expertise to others by launching an advisory business, with Dawn at the helm the following year.

“He treats the private capital advisory business at Evercore like the way a start-up entrepreneur thinks about their business”

Former colleague and current competitor of Dawn’s

By 2013, Dawn and fellow managing directors Nicolas Lanel and Philip Tsai were seasoned in the art of helping LPs offload their stakes in private markets funds. What came next is the stuff of industry folklore. Affiliate title Private Equity International reported in June that year that Dawn was leaving the bank, citing an internal UBS memo that stated he had “decided to retire and pursue other interests”. Weeks later, Evercore issued a press release saying it had hired Dawn and Lanel to launch a secondaries advisory business on both sides of the Atlantic. Tsai remained at UBS as global secondary advisory head.

Evercore’s push into secondaries has paid off. Corporate filings show that advisory fees generated $1.76 billion for Evercore last year, a 6 percent rise on the previous year and the highest in the bank’s history. While it is unclear how much of this came from the PCA unit, sources say the unit took in between $85 million and $150 million in revenue last year. That would mean the PCA unit accounted for between 4.8 percent and 8.5 percent of the bank’s total advisory revenue.

A spokesperson for Evercore declined to share financial details about the PCA unit.

Revenue estimates for the PCA unit coupled with Dawn’s own arrangements with Evercore have led market participants to conclude that he is one of the best-remunerated advisers in the business, if not one of the best-paid bankers on Wall Street.

Sea change

By 2018, private equity sponsors had truly cottoned on to the idea that by instigating and running these sales processes themselves, they could both provide liquidity offerings to their LPs, as well as use the processes to their own advantage. Blue-chip managers, spurred by Campbell Lutyens’ landmark process that year with Nordic Capital, realised that continuation funds were not just for troubled GPs or assets, and that if done right, could be a viable way to continue to manage assets.

The latest iteration of the continuation fund phenomenon involves moving single companies out of existing funds into special purpose vehicles. The trend has been driven by GPs’ desires to hold onto assets for longer than the traditional 10-year fund structure allows.

“That’s really the sea change in the market,” Dawn says. “Two or three years ago, single-company secondaries were not a thing. This year, the majority of our GP-led dealflow is single companies. This year the market will probably be $20 billion to $30 billion of single-company deals. Three years ago that was about $2 billion.”

For Dawn, GPs wanting to hold assets longer is not a new phenomenon: the first continuation fund he worked on was in 2005 for a Spanish manager.

“The technology is not new in my view; it’s just that the quality of GPs and quality of the assets has changed”

Nigel Dawn
Evercore

“The technology is not new in my view; it’s just that the quality of the GPs and quality of the assets has changed,” he says. “It has developed in that there are more guidelines around it from groups like ILPA [the Institutional Limited Partners Association] in terms of, this is the way it should be handled. But in terms of creating the vehicle to continue the life of assets where there’s more upside, creating an option for LPs, it’s not particularly new, although clearly it has developed over time.”

Dawn, who, when approached about an interview for this story said he would only do so on the condition we didn’t go “overboard”, is quick to point out that he and his team have benefited from a rising market, and that individuals in his global unit – including the PCA unit’s London-based top executives and longstanding New York-based MDs – are as integral to the effort as he is. Whereas some of his competitors are either building their businesses or have suffered personnel turnover, Evercore’s team has been relatively stable, he says.

(It’s worth noting that European head Lanel left the firm in 2017 to found his own firm, Flow Advisors, which focuses on GP-led-processes, and that Evercore itself has not been immune to departures.)

Still, industry insiders say it’s the tone Dawn sets and culture he has created within the PCA team that’s behind its success.

“He is relentless – he will never, ever, ever, ever, ever, ever, ever give up,” says a former colleague who is now a competitor. “He treats the private capital advisory business at Evercore like the way a start-up entrepreneur thinks about their business. A lot of bankers think: I’ll show up, this is when my day starts, this is when my day ends. With Nigel, he was always on. When Nigel wakes up, this is the first thing on his mind, and when he goes to bed, this is the last thing on his mind. That shows in the results.”

Asked if he agrees with the characterisation that he is persistent, Dawn says advisory work is similar to running one’s own business.

“You can’t just show up with the same ideas all the time,” he says. “[It’s about] really taking the time and the effort to become educated on the situation and to provide really honest advice. If we don’t think something can be done, we will tell people it can’t be done.”

No standing still

If you happen to be sitting by the Jacqueline Kennedy Onassis Reservoir in New York’s Central Park in the early hours of the morning, there’s a chance you’ll see Dawn on his morning five-kilometre run. Unless it’s raining. Or snowing. In which case Dawn is likely to be at home on his Peloton, where he says he has logged 730 rides.

An avid reader, Dawn spent what little summer downtime he had this year consuming no fewer than five books, including Billion Dollar Loser and The Cult of We (both chronicle the meltdown of co-working start-up WeWork), as well as Bad Blood, the exposé on failed blood analysis firm Theranos, and The Key Man, which examines the spectacular fall from grace of growth markets firm Abraaj.

The common thread running through the books is about successful companies imploding.

“One of the competitors said recently, talking about our team, ‘At some point, all empires fall,’” Dawn says, laughing. “I think they were joking. They didn’t say it to my face.”

Does he worry the good times will soon end in what’s becoming an increasingly crowded advisory marketplace?

“The only thing we can focus on is what we are doing and what we are doing for our clients,” he says. “That’s why I’ve never bothered about competition. People ask me, ‘Are you worried about your competitors?’ I’m like, no, because it’s not going to help. All we can focus on is what we’re doing. Also, this is a fast-growing market. There’s plenty of business for everyone.”