In the ever-expanding search for returns, private equity sponsors are increasingly turning to new asset classes, geographies and investment focuses. In the past several years, we have seen established funds leveraging their brands to open offices in Asia, India and the Middle East; target specific sectors like retail, social media and healthcare; and raise debt (distressed or otherwise) and hedge funds.

Amid all the action, the asset class that seems to be among the hottest right now is growth equity. In many respects, growth equity is the old new thing. Successful funds such as Summit Partners, TA Associates and General Atlantic LLC cut their teeth on and then defined the success of growth equity investing. As credit became widely available, several growth-focused funds jumped into the land of leveraged buyouts and rode deal volume and easy credit terms into the middle market a few years ago. Recently, however, many of those growth funds have returned to what they know best.

But it's also the new new thing. The volume of growth equity deals has increased steadily in the past few years, and these deals are now being chased by a variety of sponsors, from typical venture investors including Accel Partners and Sequoia Capital to traditional buyout funds such as Providence Equity Partners LLC and Advent International Corp. This trend is partially driven by the fact that there has been less opportunity in the venture and buyout spaces, and both segments are now crowded with many new funds and investors.

With debt financing scarce and/or expensive over the past few years and large amounts of committed capital in reserve, buyout funds have searched for new ways to invest their capital, and several have turned to growth equity. And now traditional venture investors see growth equity as a natural extension of what they have always done. Venture capital firms such as Kleiner Perkins Caufield & Byers have announced growth equity fundraising efforts. Other firms like Greylock Partners and Andreessen Horowitz have made significant allocations for growth equity in their new funds.

But many investors are finding that growth equity isn't ­really growth equity at all. While the typical owner-operator business that has grown beyond the founder's capabilities or strategic vision still dominates, smaller secondary buyouts are disguised more and more as growth deals.

In addition, there have been numerous examples of large funds buying very small positions in some of the high-flying companies under the guise of growth equity.

Like trying to secure an allocation of the latest cult California cabernet sauvignon, scores of investors are stumbling over themselves to pick up positions in companies such as Facebook Inc., Groupon Inc., LinkedIn Corp., Twitter Inc. and Zynga Inc. And the valuations have been staggering. When was the last time VC funds were investing in companies at multibillion-dollar valuations?

With so many investors now chasing growth deals, including many investors new to the space, there is naturally a learning curve for many participants in these deals. Investors should tread cautiously. Even for the traditional growth equity funds, there is a new set of rules, albeit built on the foundation they laid (i.e., think Xbox 2.0). These deals are not the traditional buy-and-hold model, and it is critical that the parties have an alignment on both the strategic vision and economic goals at the outset.

Among other things, investors in the growth equity space should be focused on the following key considerations and issues regarding these deals: (i) finding the right partner, as partnership is the foundation of any successful growth deal; (ii) understanding control dynamics and the differences between minority and majority investing; (iii) using debt either at the time of the investment or thereafter for acquisitions, liquidity or other corporate purposes; (iv) addressing the timing of liquidity events and the sometimes conflicting goals of management and the investors; (v) agreeing upon the use of proceeds of the investment; and (vi) determining the structure of the investment.

With this amount of capital rushing into the market, growth equity deals are certain to become even more competitive and will put pressure on the typical protections growth equity investors are used to. Investors will need to be savvy and bring more than money to the table.

This is especially true of growth equity deals where, by the very nature of the deal -- that is, essentially some form of partnership -- there is work to be done by all parties to achieve success.

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Kevin Sullivan is a partner in the private equity group of Weil, Gotshal & Manges LLP and is resident in the Boston office. Kyle Krpata is also a partner in the group and is resident in the Silicon Valley office.