The article notes that large institutional investors often negotiate for preferential treatment in respect of management fees, carried interest splits, co-investment rights, and advisory committee seats; either due to the absence of a MFNclause or a tiered MFNclause, these preferential rights are not available to smaller investors. The article suggests that this trend is a negative development, with quotes from various participants—portfolio managers and lawyers—relating to transparency or unequal economic terms.…

More pertinent, why should a fund sponsor care? The short answer, is “because prospective limited partners care”. A fund’s tax structuring is often the subject of fairly extensive due diligence and negotiation by prospective limited partners, and in extreme situations where the fund sponsor cannot accommodate a prospective investor’s tax structuring requirements can result in that investor declining to make an investment.…

In light of a few conversations that I have had with various people who are interested in this space, I thought it would be good to write a brief overview of the categories of investors that a fund sponsor will typically seek to be LPs in their fund. It will serve as a primer to some of the considerations—including some legal considerations arising from the Investment Advisers Act of 1940(the “AA”) and the Investment Company Act of 1940(the “ICA”)—that anyone involved in the industry ought to consider when dealing with fundraising for a PE/VCfund that is subject to U.…

Mr. Kessler begins his op-ed with an uncompromising claim: Private equity is done. Stick a fork in it. With Kraft singles and Heinz ketchup as toppings, there are many signs that private equity has peaked as an asset class. He then moves on to give arguments for why private equity is dead as a doornail.…

There are two main types distribution waterfalls in use today: The deal-by-deal (“American”) waterfall The whole fund (“European”) waterfall As the informal nomenclature would suggest, the deal-by-deal waterfall is most commonly used by American private equity sponsors, while the whole fund waterfall is used most comonly used in Europe and Asia.…

At the behest of a friend, I’m setting out a number of observations about the private equity deals that occurred in 2014. Being January 29, 2015 when I finished writing this post, it is a little late, but I prefer to be as thorough as I can be…

First, we can see from Table 1 below a general increase—admittedly with year-to-year fluctuations—in the number of private…

So, what can we do? (Other than decide to abandon the Chinese market, a decision that seems analogous to a physician cutting off an arm to cure a hangnail.) The short answer: Become better at due diligence. It is by no means a sovereign remedy for all the things that…

First, let’s look at the private equity fundraising landscape in Asia. A number of well-known private equity firms raised successor funds, including CVC Capital Partners, The Carlyle Group, TPG Capital and Affinity Equity Partners. The success of these well-known sponsors follows the immense $6 billion Asian Fund II raised by Kolhberg, Kravis Roberts & Co.…

The practice certainly still seems very widespread and not just among private equity sponsors, if the data the Bloomberg article cites is true: Data gathered by Xtract Research show that 77 percent of all loan deals in the third quarter included provisions giving borrowers the ability to block individual lenders, up from 51 percent at the end of last year.…