The individual deal: Born of the recession...

Rajesh U. Kothari, CFA, spent some time speaking with Tom Henderson of Crain's Detroit on Strength Capital, a Birmingham-based private equity firm.

Strength stumbled onto the non-fund model as necessity required, but serendipitously it turned out to be ahead of the curve, says Rajesh Kothari, managing director of Cascade Partners LLC, a Southfield-based investment banker.

"This is a big trend in the industry, but these guys were pretty early doing it," he said. "It's been an evolution. The interest by investors, now, is less around funds and more on deals. Strength Capital has been able to find good deals. It's been a win-win for them. It's worked out great.

"Investors say, 'Let's not invest in a blind pool, let's invest in what we like.' The negative is, before, you were getting a portfolio of companies, so a bad deal could be offset by a good one. But if you are only investing in one company, all your eggs are in one basket."

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