To properly consider whether to adopt the deal-by-deal fund model, private equity sponsors must understand the pros and cons of operating the vehicle on an ongoing basis. While certain sponsors may be attracted to the streamlined structure of a deal-by-deal fund – i.e., a limited partnership set up as a single-asset fund with simple mechanics – others may be deterred by the continuous fundraising process, its impact on the scope of available investment opportunities and the activist role of investors. See “Anatomy of a Private Equity Fund Startup” (Jun. 22, 2017). This three-part series aims to familiarize fund managers with the deal-by-deal fund model by analyzing various issues to consider when evaluating the viability of the structure. This second article describes unique characteristics of the fundraising process and the general process of establishing a deal-by-deal fund, including specific rights bestowed upon investors in the fund documents. The first article outlined the basic characteristics of deal-by-deal funds and analyzed investor perceptions of the vehicle. The third article will explore the economics of a deal-by-deal fund, including unique treatment of carried interest and broken deal fees, as well as several approaches to overcoming the issue of deal uncertainty. For more on the co-investment structure, which has similar features to deal-by-deal funds, see “Sadis & Goldberg Seminar Highlights the Ample Fundraising and Co-Investment Opportunities in the Private Equity Industry, Along With Attendant Deal Flow and Fee Structure Issues” (Dec. 8, 2016).