Going Solo vs. Engaging an Advisor for Your GP NAV Loan

At F2H, we bring white-glove advisory to secondaries, capital raising, and M&A under $150m – delivering the sophistication of top-tier investment banking to small GPs, LPs, and companies. If you’re thinking of taking on a NAV loan, contact us today to start the conversation.

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Introduction

General partners (GPs) are increasingly turning to Net Asset Value (NAV) loans to manage liquidity across their funds. These facilities allow GPs to borrow against the value of fund portfolios to:

• Support portfolio companies,
• Provide early liquidity to LPs, or
• Accelerate distributions and enhance IRR.

But when considering a NAV loan, GPs face a familiar choice: negotiate directly with lenders, or hire an advisor to structure and run the process? The decision can affect pricing, structure, execution certainty, and how LPs perceive the transaction.

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What “going it alone” means for GPs

• Direct lender conversations: The GP engages banks, credit funds, or insurance companies directly.
• Negotiations: The GP handles advance rates, covenants, interest mechanics, and repayment terms.
• Documentation: Internal teams coordinate legal structuring, pledges, and potential SPVs with counsel.
• Cost savings: Avoiding advisory fees preserves fund economics.
• Challenges: Without competitive tension, terms may be less favorable, and negotiations may consume significant GP bandwidth.

Going alone can work for smaller facilities or where the GP already has strong, established lender relationships.

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What an advisor brings to NAV loans for GPs

Market access

• Advisors know which lenders are active in GP-level NAV loans, their credit appetite, and their preferred structures.
• They broaden the universe beyond a GP’s existing relationships.

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Benchmarking and structuring

• Advisors track market terms — advance rates, interest spreads, recourse levels, and covenants — across recent transactions.
• They help optimize facility structures, balancing flexibility with pricing.

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Competitive tension

• Running a structured process with multiple lenders improves negotiating leverage, often driving down spreads and loosening restrictions.

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Execution and bandwidth

• Advisors manage lender diligence, organize data rooms, and coordinate between counsel, lenders, and internal teams.
• This frees the GP to focus on portfolio management and LP communication.

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LP optics

• For GPs, NAV loans can raise concerns around risk, leverage, and alignment. Using an advisor shows discipline and fiduciary care in structuring.

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Pros of hiring an advisor

• Improved pricing and terms: Competition increases advance rates and lowers borrowing costs.
• Stronger structure: Advisors negotiate more flexible covenants and repayment options.
• Time leverage: GPs can stay focused on running funds and companies.
• Credibility with LPs: An advisor-led process helps mitigate LP concerns around conflicts or aggressive structuring.
• Execution certainty: Advisors know which lenders close reliably.

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Costs and downsides of hiring

• Fees: Advisory fees typically range from 1–5% of loan proceeds, sometimes with minimums.
• Potential friction: Some lenders may prefer direct GP dialogue rather than an intermediary.
• Not always necessary: For smaller, relationship-driven loans, advisory value can be limited.

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When going it alone makes sense

• Strong lender relationships: GPs with longstanding banking partners may already receive competitive terms.
• Low complexity: Straightforward loans without complex collateral, reserves, or multi-asset pledges.
• Experienced teams: GPs with in-house treasury, finance, and legal expertise may be equipped to manage the process.

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Decision framework

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Best practices if hiring

• Work with specialists: NAV lending is niche—choose advisors with direct fund finance experience.
• Align on objectives: Be clear about whether the priority is pricing, flexibility, speed, or optics.
• Protect confidentiality: Limit outreach to prevent leaks to LPs or competitors.
• Coordinate LP communication: Advisors should help craft messaging to investors, especially if liquidity is used for distributions.
• Stay in the driver’s seat: Advisors manage process logistics, but GPs must lead key decisions around leverage, pricing, and lender selection.

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Conclusion

For GPs, NAV loans can be a powerful liquidity tool—but they carry reputational, structural, and financial trade-offs. Hiring an advisor generally adds the most value in larger, more complex facilities where LP optics and market benchmarking are critical.

Going it alone may suffice for smaller, relationship-driven loans. Ultimately, the choice comes down to weighing advisory fees against potential improvements in pricing, flexibility, and execution certainty.

For most mid-sized or larger GP NAV loans, an advisor’s value-add often outweighs the cost.

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At F2H, we bring white-glove advisory to secondaries, capital raising, and M&A under $150m – delivering the sophistication of top-tier investment banking to small GPs, LPs, and companies. If you’re thinking of taking on a NAV loan, contact us today to start the conversation.

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