What is meant by "syndication" in private equity?

Syndication in private equity refers to the collaboration among multiple investors or firms to share risks and resources. This concept is essential in the private equity industry because it allows several parties to come together to pool their capital and invest in larger deals than any single entity could undertake individually. By sharing the investment across multiple firms, parties can diversify their portfolios, reduce individual risk exposure, and increase their bargaining power when negotiating terms with the target company.

This collaborative approach is particularly beneficial in high-value transactions, where the required capital can be substantial. Each participant can contribute a portion of the total investment, which mitigates potential losses while allowing access to lucrative investment opportunities. Furthermore, syndication can facilitate the sharing of expertise and resources, leading to more informed investment decisions and better management of the portfolio companies.

In contrast, the other options describe strategies or actions that are either focused on singular approaches or do not pertain to the concept of working collaboratively in investment.