New institutional economists1 have explained governance transactions through the use of transactional cost theories and its asset specificity components. Arguing that asset specialization, persistent in individual forms of governance, creates quasi rents and opportunistic behavior. “Resulting transaction costs between firms will tend to be reduced by means of vertical integration” (Riordan & Williamson, 1985, p. 377). The purpose of this paper is to relate this theory to the transaction cost‐economizing interactions present in firms or business units active in private equity and hedge funds management. Transactional cost literature will be employed to explain the asset specificity dimension tied to these firms. Additional organizational economic theories, including the resource‐based approach and property rights will also serve as framework to indicate our case. Contrary to transaction cost predictions, our initial empirical analysis illustrates those hierarchal structures where human‐ asset specificity skills are present show characteristics which favor a fragmented hierarchy construction. We will try to test our case using a discrete choice model of the sample skills, regressing human asset specificity indexes on the probability of integration or non‐integration. The model results could give information of the specific variables that is regulatory status and number of employees, which in a non generalizable way predict the non integrative outcome.