Understanding Private Equity for Limited Partners

um yes Anan apologizes for not being able to make it he was looking forward to this but he had some uh some Visa issues over in Dubai so um I'm a partner at triago I'm based in our New York office um my understanding so far you've looked at the private Equity world really Through The Eyes of the investors the general Partners uh to today we're really going to be taking a look at it through the perspective of the limited partners so the investors in the funds um we have a a fictitious case study um on this uh endowment and Foundation uh but uh what what it covers is pretty realistic and it it does deal with uh the issues that we face with our clients uh on a daily basis so what you'll be doing is really stepping into the role of a uh private Equity portfolio manager at one of these endowments and Foundations uh yes on can I just introduce two more friends and and beining again at class that's all right right let me just first give you a quick introduction of triago so uh you guys know what we do uh antoan founded the firm in 1992 really to raise capital for uh European General Partners uh folks that had uh investors in Europe but were really looking to diversify their LP base with more institutional investors which at the time were mostly in the United States uh so we essentially introduced General Partners to large institutional Capital here in the US um we started doing the same thing a few years later opened up an office in New York raising capital for General Partners here in the US looking to access LP in Europe as well as Asia and the Middle East we have three offices now uh Paris is is our uh main office where most of our folks are uh I'm in New York with uh eight other folks and then we've got our office in Dubai uh back in 1999 we did our first secondary transaction uh in the sense that we helped a limited partner that was looking for some liquidity options and from that point on we established a dedicated secondary practice practice so today we really have two businesses we our primary business which is Raising capital for GPS and our secondary business which is advising limited partners on liquidity options um this sort of uh shows sort of our interaction with the general partners and the limited partners on different sides of the business not sure what else is in here these are some of the uh fundraising clients that that we've had uh mostly Middle Market firms raising anywhere sa from 500 million to 3 billion uh that's that's pretty much uh our bread and butter and we've worked with uh uh buyout Venture real estate mezzanine uh as well as uh the energy sector these are some of the Partnerships we've transferred uh more recently on the secondary side uh hopefully there'll be some names that uh that are familiar to you so um in terms of my background uh yes I uated from Princeton with a degree in economics I worked on at JP Morgan on the fixed income research desk for four years uh got my MBA at uh UCLA Anderson School and went uh came back to New York and worked for maril Lynch on their private Equity placement group and I joined triago uh four years ago uh and I had their secondary advisory practice here in the US so um let's dive into the case and I'd really like to make this as interactive as possible so if you don't mind I'll just going to sort of randomly pick on people and uh there's no wrong answers so um uh please don't uh don't hesitate um maybe someone can start with just a sort of a quick overview of what the case was about and what what are some of the issues that uh the underlying issues that are going on at this point uh Matt okay um in general the case kind of focuses on this endowment logo endowment um they were faced with kind of a a denominator effect situation whereby private Equity became an inordinately large share of their portfolio relative to where they wanted it to be so at this point in time they they went the the portfolio manager went and started to look at his options um for trying to reduce that discrepancy um back to the levels it should be at he looked into secondary transactions which I guess he's kind of learning more about them M and I can continue going but I guess the kind of the bottom line is that he saw or he heard rumors that secondary transactions would be done at a very disadvantageous kind of price for a seller but as he's going along in the process he realizes that those rumors aren't actually true and he's considering number one using secondary um secondary sales to reduce his exposure to firms that he does not want to be exposed to potentially also opportunistically as a buyer for other firms that he missed on the first time around exactly exactly and if I recall they did look at the secondary Market a couple of years ago when prices were better but decided that selling didn't really make sense at that time um now they might be regretting that a little bit but since since the prices were better but nevertheless they have this issue um if you were on the board uh the trustees of this endowment what what do you think are some of the the issues you'd be thinking about um if if uh what's his name is it rick Mr Johnson um decided that or came to you and said he's considering selling uh some of those private Equity Funds a as a potential trustee as a trustee or board member what are some of the questions you'd want to be asking about doing a secondary sale or what are some of the concerns you might have let's say well anyone somebody else actually obviously you know as you mentioned you're really going to be concerned about the price kind of the discount from from par or wherever the portfolio is marked that you're going to be receiving but in addition to that it's also going to be the timing associated with the transactions these are kind of complex negotiated deals that I assume you know kind of take long due diligence yeah those are two good points there's a need for cash so price and timing that's good points um anything else yep we also like to uh think about the confidentiality issues how much information goes out in the market what kind of image you want to give very important yeah of course because of obviously when uh you go into one of these uh These funds the information that you receive is is quite confidential and you can't share it yeah it's rather question would like to end understand when um MLP sells in a secondary Market what reputational effect it might have for participating in future well GPS that was actually one of the points I wanted to bring up or wanted someone to bring up so reputational issues right because as you point out um if if you're an investor in a fund let's say GP uh XYZ what how how is that going to affect your your relationship with GPX YZ if you then sell that fund are you going to be able to enter into their next fund or are they going to lock you out forever those are all types of things that you have to think about so we so those are those are exactly the types of things that the board members of this endowment would be wondering um so the other the other question now is we understand the markets have stabilized uh the endowment is not as overallocated as it as it was before why is it that they still are complicating uh comp contemplating the sale Orin actually I just joined the course oh okay sorry half an hour right next to you I think also because uh to concentrate the management time of the lp Fund in less number of funds yeah that can uh bring a greater return sure so it's a portfolio management issue in terms of administrative costs making sure that they have a reasonable portfolio that they can monitor yeah just for liquidity calls and real estate assets not exactly exactly and let's remember that the the Market's been relatively quiet so there haven't been that many capital calls but it's the possibility that those calls could increase going forward anything else yep there this concern about motivation of certain GPS funds which were very far from reaching the uh the the threshold to get the profits exactly so um he's thinking that there's some of these groups that are just not going to be motivated to do anything and so the performance going to suffer MH uh the endowment also had distribution commitments to the beneficiaries of the endowment that in in that particular year was difficult to to do because there were there weren't many exits from those fund that's exactly right exactly anything else okay the other thing you might want to consider is right now the Market's relatively quiet what happens if uh there should be a rush to selling let's say some financial institutions decide that they have to get out of private equity and suddenly they dump a lot of paper on the market that's of course going to affect pricing as well so you sort of have to consider all these things in terms of timing a potential sale so we've decided to sell the the board is is backing uh the decision everyone wants to move forward what are some of the options that this endowment has in terms of carrying out this portf portfolio sale what are the different types of ways they can go about it any volunteers I actually have a question go for um so when you're looking at you know there's a list of some of the Investments that they were considered non-core and that's I guess maybe marked for potential disposition um what type of assumptions are you making about how accurately or recently or fairly um portfolios have been marked to Market sure valuations yeah that I mean and that's a good question the the issue is you you only have the latest quarterly information so basically you're counting on your general Partners latest quarter reports and so you have to essentially evaluate that we're going to go into that when we talk about essentially evaluating the portfolio but that's a point to keep in mind that you only have the latest quarters reports and you do have to keep in mind what has happened since that latest quarter so yeah go ahead uh I don't know I think there are a couple conflicting issues so from a pricing standpoint you'd want to invite as many people and players as you can into maybe an auction or something where you can provide them with adequate information for them to participate yeah uh but then back to the confidentiality and rep ation risks uh maybe you don't want to spread out the word too much yeah uh and and finally there's also the legal part within your contract so within each of the GPS you work with there might the the the partnership contract might have restrictions to only being able to sell to other investors within that fund or something like that sure so if we if I summarize what you said um number of options maybe one of them is to run your own auction right that's one of the things and then we can talk about the pluses and minuses of that one the other one that you alluded to is maybe you can just contact one buyer and deal with them oneon-one we could talk about the pluses and minuses of that one the other thing you can do is yep you can approach the GP about purchasing the interest uh yeah or approach the GP about facilitating exactly exactly so that's the third option y or they can contact Diego and you guys can there you go I was waiting for someone to say it okay so th those are your four options essentially and I wonder which one we'll choose um I would go with that so what are the pluses and minuses let's take the first option what are the pluses and minuses of actually I'll go with contacting the GP right away what what what would be the pluses and minuses of that on the plus side you might get you you get them to approve it straight from the start they're not going to have any have fewer problems if you probably go through them yeah they won't be as concerned about you spreading it out to people they didn't want the fund that can approve the selleries you you keep the relationship going with them they probably have they can help you with the pricing aspect of it the person who's buying from you has more leg can pay a higher price maybe if they feel they can get more legitimacy information more legitimate information from or more information from the G and so just the whole thing sort of seems like if they if they want take the time for you it probably helps you get a good price sure sure and and let's also remember that the GP does have the final say in terms of the transfer so if they work with you you're pretty sure that they're going to say yes to the transfer what would be a minus though working with the GP approaching the GP one of the things oh sorry go ahead the GP probably don't have anything to gain on participating this sale that's exactly right I mean um the GP if they want to help you out they will but essentially once you decide to sell your interests and those of the GP have diverged because you're trying to get the best price for your assets the GP is probably going to be more concerned with getting an LP they like into the fund regardless of the price they're not necessarily going to go around and and uh uh and manage a full process for you it's not what they're getting paid for so so that that's the issue you may have some you may have some uh Divergence in terms of uh overall goals yeah just a quick question when a secondary Sal occurs is the returns for the second LP um function of his cost basis or is it you mean the selling LP the purchasing LP is I'm sorry so the purchasing LP how would they calculate their Returns on a fund oh essentially the price that they buy it at um because at the moment that they buy it they own the interest outright however the position is at the point how how funded it is how uh the distributions are in the past so it's not really that that's gone they basically buy it at time x and everything that happens after time x is their return so for the GP if if the secondary LP actually buys it at a lower price they reflect a higher return yes well they they can and that's one of the the issues but yeah if you buy something at uh at $7 million and the and the current nav is $9 million you in theory can mark it up by $2 million on day one so yeah sorry go uh how do the GPS usually react to that cuz um if if they feel that you're kind of in the bad they're on the bad side of your portfolio you perceive them as such they'll probably just try to sell you into retaining the investment and why it should stti with well yeah exactly and those are all these sort of the minuses of working with a GP I mean essentially if you're telling a GP I don't really want to invest in you anymore their incentive to have an ongoing relationship with you is not that great and they're certainly not going to you know break their backs yeah add be had a situation in our fund where it was um the G the one Alps was actually going to default so it's kind of a situation where it certainly was beneficial for us as the GP get them out get new have to that's a great Point that's and and we often uh deal with situations like that where GPS come to us uh we find in those situations the GP sometimes prefers to find an agent that to sort of handle the process which basically facilitates everything they find we find a solution and they don't have to get too involved um so we've talked about the GP approach directly let's talk about the um direct auction so basically you uh here at logo you decide to have an auction on your own and contact as many buyers uh what what are some of the pluses and minuses of that one anybody probably it will be a very competive Pro because there are so many potential buyers everybody will be then probably increase the price on the other hand you will give so much information to everyone exactly and everyone out there will know that you're selling and that could be one of the issues when we talked about confidentiality and reputational for for the uh the Board of Trustees at logo that could be uh something that they really wouldn't like so you do you do get out there you get different prices from folks but at the same time everybody in the market knows what you're doing um the other option is to just go with one potential buyer but I think it's pretty obvious sure it's confidential so you solve that issue but the problem is how do you know that you're going to get the best pricing by just going to one secondary buyer out there in the market um and so finally the last option as uh we alluded to is using an agent which to a certain extent can solve some some of the issues um you're going to have a full auction process so you know that uh you're going to get more than one price uh by using an agent you can probably you can stay hidden from the Market because the agent never discloses who the seller is so you you resolve these two issues you get uh you get a more diverse pricing set so um so those are the the the ways that uh uh sellers think about um the sale process so let's um let's uh change uh sides now and let's take a look at the situation from the buyer perspective so now um I want you guys to um to to place yourselves as a potential secondary buyer and let's look at the portfolio that uh that we see that we have if I can dig it out well first of all who are the who's in the buyer world the secondary buyer world let's let's break that down who are the potential folks out there um yeah go ahead um other L fund the funds okay so um so let's say funds of funds right so primary funds of funds so guys who typically invest in other funds on a primary basis why are those guys buying secondaries it's not their traditional business why would they be buying secondaries one reason might be uh if if you have other LPS who are selling at distress prices because of the denominator effect or if they want to get out of investment then they might be able to sort have some Arbitrage they can they can pick up a a asset that they like at a discounted price yep for B market you usually don't have the J curve because it's uh more mature fund and in uh in and it's probably on on five to to seven years periods holding periods can have a better liquidity than inves in a new fund so usually a lot of primary fund funds um put aside a bucket of say 20% of their capital to invest in secondaries exactly for that reason so they can achieve a bit of a higher rate of return by investing in more mature assets so that that's so fund of funds let's put as as one group of secondary buyers who are some of the other secondary buyers well there's obviously the dedicated secondary funds right we're talking about the collar Lexington landmarks those guys so those guys do nothing but by secondaries what kind of assets are they looking for typically um anybody Daniel what kind of assets do you know that that typically secondary funds are looking for um I wouldn't know um anyone else can help them out well the go ahead probably distress well yeah this maybe but if let's think about what a secondary fund is trying to do um essentially they are giving their limited partners [Music] um the the the idea of a secondary fund is to buy more mature assets if you're buying more mature assets you're essentially giving your limited partners quicker distributions so the the types of assets that those guys are really focused for focused on are older assets more mature funds so they're not looking to buy something that was just raised they're different game than the typical fund of funds yeah I have a question I'm not so familiar with the secondary fund space so given what you said about looking for more mature assets so uh interested in in funds that we having distributions coming due soon via a sale or something like that so would that basically imply that if I was a secondary fund manager or MD I'd be looking to find sort of LP investors with within those ones who are having liquidity issues that the is that the primary way they get into to to dealers um no I mean they can get in through through the deal in any way as what I well the point that I wanted to make is that if you're a secondary fund you're going to let's say for example you want to buy a bane fund right uh bane just raised fund 10 a couple years ago now that fund has been only about 20 or 30% invested a lot of the capital is still still sitting there that is not of great interest to a typical secondary fund they'd prefer to buy say Bane seven or Bane 8 where something where they know the distributions or they hope the distributions are going to come relatively soon so those are the types of assets that they're looking for now if they know some of the other LPS in those funds sure you can you can contact the guys who you think might be distressed and try to strike a deal there so okay yeah question would you would it be possible to map the sector in terms of secondary and why assets are being besides the fact that you know they'll be looking at because if there is a market and there are sellers you know there is no Yi they going to be people that are going to go there because if there is not enough buyer the price is going to be relatively lower than the market I'm sorry so basically the main question is there enough buyer compared to the seller well that's that's the issue that we face in the market today in the market today we have more buyers than we have well we have more people who want to buy than people who want to sell I should say so that's what's affecting pricing that's is driving pricing up because there's a big demand for secondary Capital with a large secondary funds that have been raised Goldman raised a $5 billion fund Lexington is on its way to 5 billion there have been a whole number of new secondary funds have raised big pools of capital and they're looking to in to deploy that but the mark the sellers have been relatively cautious in terms of selling their assets so that's that's creating a lot of the pricing imbalance that help y going back to the previous topic can you speak a little bit more about the Dynamics of unall capital because it can be both sort of asset and a li yes yes in fact we're going to go right to that when we talk about pricing so there's a whole little exercise that I'm going to go through and I'll address that point and if I don't please remind me okay okay um so the last group of that I wanted to talk about in terms of buyers are the opportunistic buyers so these are the other endowments and foundation so for example logo itself is a buyer of secondaries so um that that's s essentially our buyer world now we've talked about the motivations the secondary guys are looking for uh older more mature assets the fund of funds guys are looking to supplement their investing with something that's also older but now the the endowments and Foundations are pretty uh agnostic they're really looking for the types of GPS that they like they want to have continued exposure to if we look at the wish list that we have from logo it's essentially a a mix and match of different types of funds and different maturities and obviously what's driving it is really uh their interest in those GPS so in looking at this portfolio um given what what I've been talking about we can look at the portfolio in in a number of ways we can sort of break it up and see how we would how we would classify this portfolio so now we looked at it at the point of being buyers now I'd like for us to think about if we were the agent on the deal and we're going to structure a transaction here so we've talked about we know what logo wants to do we've talked about what the potential buyer world out there wants to accomplish so now as the agent we have to bring them together together and we have to make sure that this is a successful transaction so how do we go about doing that um the key is really to match assets with demand so um in looking at this portfolio does anyone have any ideas as to how one would classify These funds what fits together what may not fit within this portfolio what looks like kind of an outlier if there are any or or how you would think about packaging something like this all right oh yeah go ahead I guess at a very high level there kind of I saw just GL see two categories one is kind of venture which seems to be much older vintages um you know maybe they're just taking a while to pay out or but it's certainly to drag on any um LPS return since they're all like 99 2000 the category generally more recent vintage buyout funds um of varying reputations uh some of which it looks like you know have been their nav is just quite low compared to how much has been contributed yeah MH yeah I think that's uh that's great I that's sort of how I looked at it as well I think I would probably um take some of these Venture funds and package them together because they don't necessarily fit in with the other buyout funds so probably your Austin Ventures your Menlo Ventures your Oak and uh maybe and the US Venture Partners you could put that together as one portfolio um anything else how about the rest how does everyone feel about the the rest of these funds y go ahead I'll probably also break down the uh large bio space into European and US funds that's another possibility depending on what buyers are looking for exactly any other ideas yeah I would also look into the division between how how how much percentage of the fund has been unfunded versus funded to Target different that and that's an important point because remember unfunded and funded go to very different types of buyers so the unfunded in here uh would be your Advent International um your Silver Lake 3 uh the Madison Deerborn and the tpg so you might want to strip those out and do something a little different so I mean that's just some ideas into to how we would look at the portfolio obviously we'd have to dig into each of these assets and and uh and uh and do a little more work to figure out what the best solution is but as the agent the first thing that you're going to do is essentially get all the documents from the seller meaning and the documents that you need for the latest quarters the latest quarters um yep sorry go ah just as an agent your job description include take a look at the funds and going back to your client say you know what I wouldn't invest those funds as you know Advance track record whatever in China has been truly amazing yeah and I know you need quity but this fund can potentially you know BR a lot of money for you you can go P your client not to sell a portion up yeah usually it may be uh the other way around I mean if if something's a great performer then we might then the idea is you might get a great price for it so you might sell Advent at a nice premium to nav and so therefore it still might be a good sale even even if it it does have great Prospect uh you might however tell them I wouldn't sell this fund because there's uh two portfolio companies that are essentially um public and whatever price you're going to take no one's going to pay you nav for it so you're going to take a discount on something that's already public so you you should just hold on to that that that's the type of advice we give often yeah do you verify nav um so I was just going to talk about that what we do so we collect all the the latest quarters nav financial statements um capital account balance the we look at the GP uh reports annual reports we look at subsequent flows and distributions and we look at the LPA our job is not to we're not a valuation shop so we're not say a Duff and Phelps that's going to give you what the intrinsic value of this portfolio is our job is to tell you what the market what what price you might obtain in the market so we use the information from the documents as well as transactions that we've done in order to give you sort of a range of where the portfolio might trade yep perhaps a bit more basic question but could you please clarify some of those um you know categories because for instance DPI or tvpi is not very clear to me oh sure no problem uh DPI is uh distribution paid in so basically if you look at uh if you look at Austin the distributions are 0 4X of what they've put in it so far and tvpi is total value to pay in total value is what is the nav plus the remaining commitment okay um so we've done the analysis for logo where the agent we've done the analysis for logo we give him an idea of where the portfolio is going to be priced um now basically we we they they have to figure out on their own what they're going to do so they they decide to to go ahead with the sale now I've said to you that the market is extremely inefficient and so let me um let me give you an example slide 23 I kept on stressing the fact that we really have to find the right buyer for these assets so these are some examples of of funds that we've traded recently um and uh we kept the name somewhat uh somewhat out of it but you just look at the the pricing differential um I I can just this is a bane N9 that we traded uh not uh not that long ago and the pricing that we obtained from a buyo was a 33% discount to the March nav but what's interesting is look at where some of the other pricing was it's as far as far down as a 70% discount to nav so we're dealing with a very inefficient Market where pricing is really all over the board and in order to to transact at the right price you've got to find the outlier so again this is the idea of really being focused on specific assets and matching the right assets with the right buyers the price that we sold um the Bane 9 was to a family office that was essentially interested in getting into Bane so they weren't a secondary buyer they had a they had a close relationship with the partners at Bane they wanted some exposure to them and therefore they were willing to pay a price that was uh a bit higher than the market now you might look at this and say well why would anyone pay a price that high they they must be silly they uh they why are they doing that well essentially these guys are thinking that um we we have a market clearing price because a lot of the guys offering the 60 70% discount they're offering the price but they're not transacting at anything so you you've got to look at the motivation of the guys who really want to be in the fund and therefore are able to offer a market clearing price so we've talked about how the a assets fit together let's let's look at each of these portfolios separately let's say for example that we went um along with uh Lisa's suggestion and we stripped out the The Venture fund so we've got we've got a portfolio of uh about 28.5 million if I did the calculation correctly about 28.5 million of a few Venture funds with not much of unfunded except for men low 10 so that's a portfolio that we could Market to one group uh we talked about a possible European bucket um we talked about the unfunded assets which we can Market together as well um so in the end we decide on three buckets let's say we just go with the The Venture funds the unfunded assets as well as what I I'll call the rest is the main portfolio the reality is the way we typically do these is much more uh much more complex we have different sub portfolios that we offer to different buyers we do a lot of sort of mixing and matching in order to get the best price but I'll keep it a relatively simple here now um in talking about pricing um so pricing is reflected as a percent of nav we talked about premium and discount to pricing um and there's a lot of talk whether funds are trading at a premium or trading at a discount It's relatively misleading and can anyone sort of elaborate on why it's misleading to talk about the overall market trading at a 10% discount or whether 20% discount is a good price or it's a bad price whether a 10% premium is a good price or a bad price it's one of these things that's thrown out in the Press quite a bit but it's it's very misleading to think about the market that way can anyone sort of give me an idea of of why that is yeah I can think of two reasons one is the fact that many transactions wouldn't necessarily be occurring at those prices right and the second is you're you're taking a snapshot view of a portfolio but what you're buying is a claim to cash flow that's being realized in the future which doesn't necessarily correspond to the valuations today exactly exactly yep go ahead who values those portfolios their own GPS Val the GP value then I think that's probably reason yeah that's another reason I've seen funds that smaller funds South America with you know raising Capital that LPS require a third party advisor to to fund so that you know right right and and the other thing is yep go ahead now so you have a private company that's not public trade it's not open uh for you to evaluate this NIV you're not doing every quarter from independent audit using or the book value or some value that uh does not follow what's today right so the NIV doesn't actually represent uh the V of this company right exactly so let's say for example that uh you've got a position that's uh as of q49 was valued at $5 million and you get a price of a um a 20% discount and then this quarter you get a price of a 10% premium well it doesn't really matter because you've got to look at how the nav's moved so if the nav went from 5 million to 2 million then your 10% premium is really not a better price than the 20% discount you were going to get last quarter so people often fail to take that into account and throw out these premiums versus discounts as if they're sort of absolutes but you really have to pay very close attention just to how the nav is moving from quarter to quarter yeah is it possible and do you actually do this to actually calculate the nav today based on the information that you have from Beav quarters and public information we do we do an estimate of where we think the nav should be um and also take a look at how soon some of the realizations are going to come come into being because that that's very important when you're going to get some distributions so those that's all part of what goes into play but you do have to take into you do have to depend quite a bit on the gp's valuations because we we can't pretend to know more than the GP follow up very basic question too about na is let's say you have a private company how does the GP value that is that based on cost or is that based on a DCF valuation different GPS do it different ways some you know some are using DCF some are using um uh comparables so GPS always in their financial statements they'll have a full explanation of how they value those companies uh usually looking at comparables yeah what about when you have a deal that's a club deal and you have multiple GPS valueing at at different uh marks that happens it happens and so yeah I mean and that's in a case where basically you know you find the gp's got value the highest and you think maybe I should sell that one and uh it's it happens once in a while yeah does the volatility in the NAB or like if it's an industry focused fund so it's a media focused fund volatility in the na the market pretty much closely yeah I find in in general if I look at what happened over the last year I find that GPS T tended to have been quite aggressive in marking their portfolios down um so um what we notice let me see if I can find a slide that tracks the nav D do you remember what page that was on um what we noticed was that slide 18 if you take a look at here this is the nav evolution in the last in uh 08 and 09 so you saw in q48 a pretty aggressive markdown in the navs on especially in the large buyout sector uh and then there's been uh and then those guys have tended to uh to start writing things back back up we don't have q409 but it was probably up another 5% in q49 so uh yeah I think it it does mirror yeah so just a quick question so on large buyout q1 of 09 down 5% what what happens when you have a situation where the sponsors are telling you we're down 5% and the debt markets suggest that they're down 35% or or even 100% yeah well we dealt with a lot of cases like that where we saw a lot of funds that you know we knew the numbers they were publishing were just you know didn't make any sense you know they were essentially relying on comps to P to price their assets but the equity in their deals was worthless so we saw that quite a bit and and that's why at that time in in q48 q19 you were if you tried to sell a large buyout fund you were barely getting any I mean try selling Blackstone 5 at that time and your price was probably around zero so yeah how much information do the biders in the secondary Market have to be able to have assessment and what should be the bidding price and yeah um the biders come in are really in two groups some of them are in the funds already so they have the information they are able to talk to the uh the GPS they're able to have the conversation the dialogue and and sort of uh have a walk through uh portfolio Company by portfolio company the others are taking a look at the docs um and trying to organize calls with the GPS uh GPS come from you know different all shapes and sizes some guys are very open to having that dialogue with the potential buyer others are not that interested so essentially these guys have to make a call at the end of the day as to how much information they have yeah what percentage of your clients are like Gatekeepers not LP themselves but yeah um that's actually a good question uh last year we saw a big jump up in terms of uh Gatekeepers and actually I think we've got a chart on that too um the reason being that a number of Pension funds and uh started to be more active in buying assets but they can't they don't really have the wherewithal to price these things themselves so they have they hired their uh their agents and Gatekeepers to do that so some of the groups that are relatively I mean really you name it you know Cambridge Associates and uh all those guys have been very active in in U pricing assets for their clients 6% yeah now that makes up 6% I before that it was it was negligible but now they make up 6% of 6% of buyers okay so continuing with our sales scenario and by the way way I before I I go on um so we talked about the pricing being done at at reference point the quarter ended all subsequent calls and distributions are netted against the price is is that that pretty clear to everyone if it's not so let's say your fund uh Q4 let's say in q48 your nav is $5 million if there was a call of a million dollar after the after that uh that reference date then that is actually netted against what the uh the buyer pays calls and distributions are netted so um so what I wanted to do is give you an example and talk about sort of the pricing that that and and also the unfunded um so let's say for example that um this and this is where we'll we'll get into the unfunded and and how pricing pricing affects so let's say there's a fund uh XY y z um that's a $50 million commitment at December 31st uh 10 million of capital had been called and the nav on at that date was 8 million all right so 10 million's been called the nav's 8 million um and this is all at December 31st 2009 then on February 1st another $2 million is called so we're trying trying to sell this for a limited partner the highest price that we get out in the market is $4 million okay can can everyone tell me the different uh how we would talk about the price here so what what would be the base price how would what what would we quote as a base price let me just repeat it's $50 million commitment to a fund 10 million of capital has been called the nav is 8 million at December 31 on February 1 there's another call for 2 million we go out there to Market this everyone's looking at the December 31st date and the highest price we get is4 million so what's the base price well as as a percentage of nav how would we say the the what's the base price what's the sorry 50 exactly the price is 50% so the the price that is being offered out there in the market is 50 %. but let's think about the adjusted price and let's see if you you guys can figure out what I'm what I mean so granted the base price is is $4 million but how much is the seller actually going to receive when the deal closes let's say the deal closes on March 25th okay how exactly so the seller is going to get 6 million everyone get that because of the $2 million call so therefore what is the adjusted price uh well let's think about it so the seller is going to get 6 million and their nav or their value is the 8 million nav plus the 2 million so 40 60% 60% so 40% discount is going to be the adjusted price okay so that's how we look at these different issues of pricing now um another way to think about things that are relatively unfunded because when you're looking at a position like this where 40 million of the capital still hasn't been called what's the goal of the seller a seller here is really trying to get rid of all this Capital commitment that's sort of lying around that they're the the for some one reason or another they they want to get rid of so we often want to talk about discount to Total exposure and I think this is the point that you were making earlier so we're want to talk about discount to Total exposure so let's think about total exposure total exposure is your nav plus your unfunded liability so what would the discount to Total exposure look like on something like this so basically what does it take for me to fund this 40 million that you need to fund well the way I would word it is what penalty do you have to pay what price do you have to pay as the seller to get out of this $50 million commitment that you made in looking at total exposure and looking at nav plus unfunded because the typical way we look at the at pricing on the secondary Market is just to look at the nav but now in a position that's so unfunded we want to look at the total exposure because a lot of the exercise here is to get rid of that future commitment liability so what with the numbers that I've thrown out I'd like to see if anyone can figure out like what would the discount to Total exposure be go ahead so uh your total exposure is 48 million and you are get read of 46 would be a discount of 4.2% is it 46 or 44 everyone that okay close but all right so it's uh so it's 8% discount right did everyone understand how that was done is that pretty clear sorry go ahead question so in some cases they would like to reduce but in some other cases they don't have faith on the GP anymore like happen in yes how do how do nobody wanted to yeah that's a different situation in a lot of those funds frankly the GP lowered the fund size another example of that is a sun five where the GP cut the fun size by 20% because essentially all the LPS felt that they had given too much capital and they wouldn't find the opportunities to invest in that so it it depends on what uh you know what the overall uh the feeling in the market is out there but it's essentially kind of the same exercise yeah when you come down the fun side what happens to the Management Field that you already receiv on the orig um that's a good question that's a good question I don't think they're return ear um I I don't know what they did on sun 5 do you know David I don't know I don't know um so we so we've looked at selling funded and unfunded get the idea of U of a discount to Total exposure versus the base price to naav so those are those are all um the way that that we look at transactions in U in our business the last part I want to really go through is sort of the closing and the transfer process and then I'd uh open up to questions if anyone has anything they want to they want to cover um the closing process once you find uh once you have a buyer that uh um that uh you can agree with on price we move to usually the the purchase and sale agreement signed between buyer and seller uh which outlines the terms of the closing the price uh all the uh schedules that that uh uh um Define the position at the specific point in time um the uh one of the funds on here uh I believe has a right of first refusal it might be Silver Lake 2 how would you get around a right of first refusal if you're a buyer is that something can be done do you just uh or how would you feel about a right of first refusal if you're a buyer let's let's start with that actually yeah Char some sort of a breakup Fe or some kind of a I mean if you're going through all this work yeah yeah yeah usually breakup fre is hard to do but yeah you'd want to get compensated for that depends on how much information I have so I I know that the are the fun like carment yeah you know people were actually selling you know you could yeah depends yeah depends yeah uhhuh go ahead uh if I understood correctly i' feel pretty badly because of winter curse so basically if you if you bid for this and you set the price that someone can match and then the other LPS in the fund have more information if they know the price is worth it they can just close at that uh and if they let you pass with it it's because you gave a price that was too high yeah yeah exactly so right so you essentially are are setting the market price and then allowing everyone to come and take it away from you after you've done all your work so it's not a nice thing to have so how do you get how can you potentially um get beyond that one of the things folks often do is if you're bidding for a portfolio and um you have there's multiple assets and one of them has a right of first refusal you basically assign prices to each fund and the fund that has a right of first right of first refusal you bid at a 60% premium and you're pretty sure nobody's going to buy it at a 60% premium right so you essentially allocate your pricing amongst the portfolio did everyone I see some blank stairs goe so so you you basically justy that yeah so it's not the the fund that has the right of first refusal refusal the right of first refusal you bid at a much higher price way above the market price and then you take away from the pricing of the funds I don't have a roer because it doesn't matter you can you could as long as the seller just wants their overall price so they don't care how you allocate the different prices among the different funds but for the fund that has the roer you have to alert the GP the seller has to alert the GP to say that I'm selling this fund at this specific price so then when you allocate the pricing among the different funds the seller can say to the GP I'm selling your fund at a 50% premium who's going to do better than that would thater the risk of in what sense purchase yeah you're to purchase five funds and it's a package so yes yes question for that that only holds obviously if the sell bundling portfolio in but then as a seller probably want to break down portfolio because I try to maximize different funds I mean then well there's a tradeoff WEA stru yeah it depends I mean um You probably you're going to want to break up funds but that doesn't mean that you're going to want to sell funds individually you might package say four or five funds together and find a buyer that's really looking for that package and when you have that package then you can you can diversify the price between buing everything selling IND exactly exactly are there any liability issues associated with that if you're sort of allocating value disingenuously um I mean to be honest with you not sure that it's real well I don't know it's a good point never and do we have a lawyer you know I mean you're you're really just allocating assets it's not like it's not like you're saying this is uh it's not like the market always says that this is worth that let's say for example you sell let's say these guys had sold Bane 10 at a 50% discount does that mean that Bane 10 is worth 50% of the nav does that mean that Bane 10 has to write down their nav because that's the price at which it sells out not necessarily it's really just it's just a market of buyers and sellers so it's not really setting any um um it's it's not really sort of setting a market price or or selling a a valuation which is what I what I'm trying to say y go ahead so this raises a question of like the secondary Market that's developed for private equity for LP interest has caused changes or you know make some terms in fun funds less favorable than they used to be are there any others other than the one you mentioned that have come under scrutiny or have changed since this Market's developed I'm sorry you mean the the GPS or so actual terms like you said the writer first refus difficult in context of a secondary Mark is is this the only term or have yeah we're actually seeing fewer rights of first refusal because the right of first refusal is a bit of a pain for the GP um the the reason they started it or a lot of them had it was because um some of the big secondary firms basically started saying to a lot of L GPS we'll invest in your fund but we want to make sure that when there's a secondary I mean they they would say We'll invest in your fund on a primary basis but we want to make sure that when there's a secondary we have access to it so the GPS wrote it in the LPA that oh let's put this right at first refusal to make sure that these guys have a first look whenever there's a secondary the problem now is all those guys who have rights of first refusal it's a huge administrative nightmare I mean to to because so many people are trading These funds right now can you imagine being in Sun 5 uh we traded over 150 million of of uh of commitment in Sun Five last quarter or or two quarters ago it's if they had had a roer it would have just been a huge administrative nightmare for them so a lot of we we're seeing a lot of GPS actually moving away from these types of things um the the only issue we come across where GPS may be a little bit sensitive to the secondary Market is if they're actually currently fundraising one of their another the subsequent fund uh because obviously if you can go into fund xus one you may not go into if you can buy fund xus one you may not go and invest on a primary basis and fund X so so a lot of times they might say while we're fundraising we're not allowing any transfers that that's one of the things that we've come across that's probably the most important one to answer your question yeah so this uh how how do GPS get around the trick that he just mentioned uh if there's a right of first refusal and if a secondary buyer is putting a premium on GPS would probably get upset if that is no no not really GPS don't really care um I mean because remember the GP ultimately always has the final say in terms of whether they want to allow the the lp or not right no matter what the price the the GP allows the transfer so if it's an LP they definitely don't want then even if you've way over bit on the pricing you're still not getting in so the GPS don't really care about what pricing you get like I said if if they had been trying to please you know a secondary buyer who wanted to have access to the funds well if it didn't work out didn't work out it's not the gp's fault um and like some people have already alluded to sometimes just being able to facilitate the exit of an LP that couldn't uh couldn't commit or was facing default uh GPS prefer to just find a solution to the problem that's generally what we find yeah 32 or place you have to register any secondary transaction uh more and more um well I shouldn't say more and more but some GPS are starting to work with uh qualified matching Service uh the reason they do that is to not um exceed the amount uh of any fund that can be traded in a given year uh certain funds uh there's actually I I don't know the details of the law but there's a threshold that a fund can't be traded at more in a given calendar year and after you exceed that threshold there is a possibility that the fund may lose its exempt status so obviously that would be the worst situation imaginable for a general partner uh so in order uh to manage the transfer of funds they set up a qualified matching service which often times means that only a specific amount can be traded per quarter and usually it's every quarter ends sometimes every half year and the GPS monitor the volume very carefully so for some funds that have been heavily traded you can have a backlog of things that are waiting to be um transferred at a specific date there's a number of funds that we traded in um March or April of 09 that closed Jan Jan 1 2010 because we had to wait for the uh for the the the G the window to open up for the buyer and the seller it makes no difference it doesn't matter because the the moment you sell the moment you sign the purchase and sale agreement all the cash flows get cheed up so you just have to wait a little bit longer to actually get your money but it it the situ the the sale happens at that date anyway yeah so I think this gdlp relationship is quite similar to what we see in bank loan or loan trading where in some cases let's say you're trading the bank loans of company X if you want to sell this to someone else the company management should approve this if they don't want this then the investment Banks usually write some kind of the contracts where you just pass through the cash flows and in return you get something yeah so you don't care about what company manag says but you do your deal yeah is thisable to yes it is it is uh there there have been issues where uh an LP wants to sell and uh the GP will not allow transfers so you do a swap essentially a swap agreement um it happens quite a bit there there are some um legal things you have to think about um they there there are laws that say that essentially if if you are getting the cash flows then you're the owner and you have to declare yourself as the owner even if you're not officially the owner so those are all things that you that that have to be taken into account uh sometimes especially if it's a uh um International investor there are other laws that that come into play so it adds a degree of complexity to it uh but it does happen quite a bit and and we'd call this you know some we call it a structured transaction yeah don't you happen to have a lot of problem with tax issues because I was thinking for instance in Spain you have you have have very specific kind of of Corporation to conduct private activities so if you do this synthetic you would not be uh you wouldn't be eligible for the for the tax relief so I guess this should be that's a very good point and and I missed that that was another uh thing that we faced is and again especially on the international side where there would be tax issues involved so all these things have to be taken into account which is why the majority of the market functions as straight sales um there's a lot of talk about structured transactions but often times the the legal fees associated with these with these transactions are just prohibitive and so most of the market is straight sales yeah if you project forward say 10 15 20 years how how do you see this Market do you see it becoming an efficient market very liquid very low spreads a lot of Regulation or do you see it remaining as this just the oneon-one negotiated transaction yeah uh 10 20 years that's I don't know I I don't even know like next year what this Market's going to look like but um I think my feeling is as long as the general Partners have the uh keys to the information and the final say in terms of the transfers that this Market will tend to continue to be highly negotiated um there have been some there have been some efforts to uh set up uh things that are close to exchanges try to transact these uh you know on broker screens uh uh or online or things like that uh to a certain extent I think that stuff is still relatively a very minor part part of the market um and and most of it is really more of this type of Highly negotiated one-on-one type transactions and again I think that's because um the GPS have the final say and and the the information out there is quite asymmetric you know yeah so by you know selling secondaries and helping B funds yeah you probably have a pretty good of the market of the what of the per Equity Market yeah uhhuh so the question is what the tri was ever thought of becoming a beekeeper or not and what would be your results yeah I mean um I we we'd have to fundamentally change our business uh probably have like the knowledge and the network if you ever decided to ship your business storage BEC so mind and what make sense yeah well the difficult part for us would be that um half of our business has been uh relationships with General Partners so we've raised capital for them we've given them strategic advice things like that uh how to raise their fund how to structure their funds uh one of the things I didn't talk about but we work a lot with uh new funds we we worked with very large family that was that had a public business and they wanted to start wanted to create a private Equity Fund so we worked with them for over a year in terms of the issues they would have to think about so because we're very um we're an adviser to the GP Community as well it'd be difficult for us to to become you know a paid advisor on the lp Community also in terms of them investing in funds you know and being a gatekeeper but um you know our business is always evolving but that's not uh that's not an area that that we've really kind of done much work on oh sorry yes go ahead um so I was just curious in light of uh you know some of the the New York pension SC I was thinking last year and of tightening rules around placement agents I was just curious as to whether there any lasting Fallout or and how you say the future no that's that's a very good point um lasting Fallout I would have to say no um I think for a while we were being cautious in terms of who we were calling and and uh you know who we were calling on and and getting in front of but um one of the things that I think's been rather positive about what's happened with uh with New York is that um uh it's tighten the standards of what a placement agent should look like um it's uh [Music] um the the goal was really for all agents to be licensed with finra uh all things that we've had for a very long time so it's essentially kind of weeded out the folks that were just you know relying on on relationships and kickbacks and so on to uh to to get further uh in the business so for for us it's been a pretty good thing and and the markets seems to have reacted the same way yeah do you mind sharing broad information about what fees are like for secondary placements yeah sure yeah that's probably the most important thing um um yeah generally um the fees are a percentage of the P of the price or or the value that the seller receives so for example if you sell uh a 10 million nav fund at $8 million and you receive cash of say8 a half million because there were some subsequent calls uh our fee is a percentage of that uh 8.5 million and the fee is usually between 2 and 3% that that's the the general range yeah use for first team that you're fundraising yeah for fundraising it's uh similar uh well we do all types of different uh different Arrangements um but typically it's 2% on new money but you don't have SE work with anyam no no no work process kind yeah yeah sure uh we have um so we have Partners in all three of our offices uh whose job is really to monitor the market and uh find the GPS that we want to work with on a given year we'll probably work with uh 8 to 10 General partners and we try to diversify it in terms of uh strategy uh geography and size so we want a a buyout fund a venture maybe a venture fund these days maybe not um uh let's see uh energy mezzanine we want to work with some guys in Europe we want to work with guys in the Middle East so if you if you want to only do 10 funds there's only so many that you can look at so our partners are constantly on the road meeting with GPS we we find the ones that we really like uh we sort of run through the numbers look at the story we discuss internally whether we think this is a group that's going to work we have um our folks who deal with the limited partners figure out whether this is something that's going to have demand and then uh and then we'll basically pick a GP so that's the typical process so you had a question yeah I don't know if it makes sense but whether you're participating in any upsite say like if you're selling a portfolio that has an effage any you up 10 and you can be able to sell that for2 just what yeah yeah definitely um plus yeah yeah definitely we've had many many uh agreements where uh if we can sell a portfolio at uh at uh at a 10% premium for every percentage Point higher than that our fee doubles or I mean you know incrementally doubles or something like that so yeah obviously yeah different I mean we try to the most important thing is to be aligned uh with our client which is why we want always take a percentage of the actual amounts of capital that they that they receive yeah what's the normal duration from start to finish on one of these transactions I love when people ask questions where I have a slide there um so uh typical I would say anywhere from 10 to 14 weeks um and that is um you know I can go through the St the preparation is really collecting all the documents um outlining a uh a price for the potential for the sell giving him an idea of what issues how the portfolio should be structured um the documentation is giving access to all the potential buyers uh the information that's out there the contacts uh were very focused on limited auctions we want to make sure that we invite the right people to the process not folks that are going to make the process dilutive um interim discussions is when uh uh the potential biders analyze the portfolios we usually give them about three weeks to do that and then the first round offer all auctions are done in a two- round process first round we weed out the guys that are not going to make it to the second usually second round is anywhere from two to three folks um again they get to do some due due diligence with the GP get to speak to the GP talk about the portfolio companies fine-tune their pricing and at the end uh the final offer is in the form of a uh binding letter of intent um review that with uh the seller uh any last minute fine-tuning and then we have a uh assigned Loi then usually you probably want to allow two to three weeks for the purchase and sale agreement that's when you get the lawyers involved those guys take a lot of time um you get your purchase agreement then you probably have to allow another 3 to four weeks for the GP consent so you have to send the seller has to send a letter to the GP saying I have found a buyer I'm interested in selling my fund I found a buyer at this price maybe doesn't have to disclose the price dep depends on the terms and then has to wait for the formal okay from the GP once all those things are done you have the transfer and the closing and wiring and like I said 10 to 14 weeks it's typical yeah just a quick question how surgical is the GP is that kind of a function of how fun perform in the pth what is that yeah uh it depends so if it's a if it's a buyer that's already knows the GP and has followed them very well uh it can be pretty uh pretty light but if it's a a GP that they don't know and the fund documents are not all that clear then you're going to have some guys who really want to going to going to want to dig in and and uh do sort of a top down analysis of every portfolio company so it really depends on uh on the GP yeah curious if your two business L uh sort of helping GS raise funds but also helping LPS sell their portfolios do you ever come across had one presen the pfolio yeah and that's a good question um we had a situation recently actually where uh there was a a fund that we were raising and uh we had one client that had their prior fin portfolio and they were looking to sell it um Our advice given that we knew the GP quite well Our advice of the client was now might not be a good time to do this because as this fund is Raising currently they're going to be very demanding about the transfer and some one of the things that a lot of uh funds who are raising guys who are raising funds due they do they they request staple transactions in the sense that they say okay let's say you want to buy my fund two or you want to buy fund two from this seller I'm going to say you can I'm only going to approve the transfer if you also commit to my fund three it's called a staple transaction very unpopular with Buyers unpopular with with everybody um and the Market's really moving away from that but GPS some GPS are still rather adamant about that yes um given your position as a placement agent you probably uh you see a lot about what is happening with the fundraising situation and we have heard quite a bit about the the effect of the crisis on fundraising and private Equity yeah I mean fundraising has been quite tough David do we have any stats on latest fundraising environment I'm not sure but it's been it's been a tough environment for sure um I I would say the areas of the fundraising environment that have been um probably more robust are distressed GPS raising uh for distressed investing uh secondaries investing has been rather robust uh mezzanine has picked pied up a little bit as well but on the traditional buyout side it's been it's been pretty rough going um and like I said earlier we try to have a pretty diverse offering in terms of the types of funds that we're offering to our clients so we were working with a group in the UK um raising a distress fund and uh they had a stellar reputation and we were able to raise that in three months and it was over subscribed and this was in 2009 in the in the depths of the the bad Market so um so there % 50% less so the overall overall fundraising environment was 50% lower in 2009 um so obviously it suffered and especially I would say on the uh the middle the buyout Market in general certainly big buec terms in term yeah we we probably saw um people being a little more flexible About Management fees uh we heard heard about groups uh getting rid of the 2% and and essentially defining a management uh Fee number that they allocated between LPS so that was something that was talked about um you know probably I think we're done with the 30% carry that uh uh that that doesn't seem to be happening Much Anymore uh those are some of the the things that uh that we saw do you have a prediction on how many bio farmers will go business um you know it's hard to say I I I sometimes I I looking back in uh in the 0 01 02 03 I thought there were a lot of groups that wouldn't have survived and somehow they managed to so I don't know some some guys make it and others don't but not sure the size that's true the size of funds has decreased that's for sure yeah there was a lot of talk about the denominator effect bringing down fundraising because of how out of whack it was relative to equities there's been a return of equities right you see the valuations come back up do you still think that that is going to be a cause of concern for for LPS or do you think that that's not a reason anymore for them not to continue investing in the private Equity Building I I think a lot of LPS have resolved more or less some of the denominators effect issues many of them still are slightly Overexposed um but not as much as they were obviously um I think it's still going to play a role though a lot of these guys um are looking at the situation rather carefully they don't necessarily want to do anything radical so they're sort of going to wait for the de denominator effect to solve itself over time so that's definitely that's going to slow down fundraising in my opinion one last question okay thank you okay thank you

um yes Anan apologizes for not being able to make it he was looking forward to this but he had some uh some Visa issues over in Dubai so um I&#39;m a partner at triago I&#39;m based in our New York office um my understanding so far you&#39;ve looked at the private Equity world really Through The Eyes of the investors the general Partners uh to today we&#39;re really going to be taking a look at it through the perspective of the limited partners so the investors in the funds um we have a a fictitious case study um on this uh endowment and Foundation uh but uh what what it covers is pretty realistic and it it does deal with uh the issues that we face with our clients uh on a daily basis so what you&#39;ll be doing is really stepping into the role of a uh private Equity portfolio manager at one of these endowments and Foundations uh yes on can I just introduce two more friends and and beining again at class that&#39;s all right right let me just first give you a quick introduction of triago so uh you guys know what we do uh antoan founded the firm in 1992 really to raise capital for uh European General Partners uh folks that had uh investors in Europe but were really looking to diversify their LP base with more institutional investors which at the time were mostly in the United States uh so we essentially introduced General Partners to large institutional Capital here in the US um we started doing the same thing a few years later opened up an office in New York raising capital for General Partners here in the US looking to access LP in Europe as well as Asia and the Middle East we have three offices now uh Paris is is our uh main office where most of our folks are uh I&#39;m in New York with uh eight other folks and then we&#39;ve got our office in Dubai uh back in 1999 we did our first secondary transaction uh in the sense that we helped a limited partner that was looking for some liquidity options and from that point on we established a dedicated secondary practice practice so today we really have two businesses we our primary business which is Raising capital for GPS and our secondary business which is advising limited partners on liquidity options um this sort of uh shows sort of our interaction with the general partners and the limited partners on different sides of the business not sure what else is in here these are some of the uh fundraising clients that that we&#39;ve had uh mostly Middle Market firms raising anywhere sa from 500 million to 3 billion uh that&#39;s that&#39;s pretty much uh our bread and butter and we&#39;ve worked with uh uh buyout Venture real estate mezzanine uh as well as uh the energy sector these are some of the Partnerships we&#39;ve transferred uh more recently on the secondary side uh hopefully there&#39;ll be some names that uh that are familiar to you so um in terms of my background uh yes I uated from Princeton with a degree in economics I worked on at JP Morgan on the fixed income research desk for four years uh got my MBA at uh UCLA Anderson School and went uh came back to New York and worked for maril Lynch on their private Equity placement group and I joined triago uh four years ago uh and I had their secondary advisory practice here in the US so um let&#39;s dive into the case and I&#39;d really like to make this as interactive as possible so if you don&#39;t mind I&#39;ll just going to sort of randomly pick on people and uh there&#39;s no wrong answers so um uh please don&#39;t uh don&#39;t hesitate um maybe someone can start with just a sort of a quick overview of what the case was about and what what are some of the issues that uh the underlying issues that are going on at this point uh Matt okay um in general the case kind of focuses on this endowment logo endowment um they were faced with kind of a a denominator effect situation whereby private Equity became an inordinately large share of their portfolio relative to where they wanted it to be so at this point in time they they went the the portfolio manager went and started to look at his options um for trying to reduce that discrepancy um back to the levels it should be at he looked into secondary transactions which I guess he&#39;s kind of learning more about them M and I can continue going but I guess the kind of the bottom line is that he saw or he heard rumors that secondary transactions would be done at a very disadvantageous kind of price for a seller but as he&#39;s going along in the process he realizes that those rumors aren&#39;t actually true and he&#39;s considering number one using secondary um secondary sales to reduce his exposure to firms that he does not want to be exposed to potentially also opportunistically as a buyer for other firms that he missed on the first time around exactly exactly and if I recall they did look at the secondary Market a couple of years ago when prices were better but decided that selling didn&#39;t really make sense at that time um now they might be regretting that a little bit but since since the prices were better but nevertheless they have this issue um if you were on the board uh the trustees of this endowment what what do you think are some of the the issues you&#39;d be thinking about um if if uh what&#39;s his name is it rick Mr Johnson um decided that or came to you and said he&#39;s considering selling uh some of those private Equity Funds a as a potential trustee as a trustee or board member what are some of the questions you&#39;d want to be asking about doing a secondary sale or what are some of the concerns you might have let&#39;s say well anyone somebody else actually obviously you know as you mentioned you&#39;re really going to be concerned about the price kind of the discount from from par or wherever the portfolio is marked that you&#39;re going to be receiving but in addition to that it&#39;s also going to be the timing associated with the transactions these are kind of complex negotiated deals that I assume you know kind of take long due diligence yeah those are two good points there&#39;s a need for cash so price and timing that&#39;s good points um anything else yep we also like to uh think about the confidentiality issues how much information goes out in the market what kind of image you want to give very important yeah of course because of obviously when uh you go into one of these uh These funds the information that you receive is is quite confidential and you can&#39;t share it yeah it&#39;s rather question would like to end understand when um MLP sells in a secondary Market what reputational effect it might have for participating in future well GPS that was actually one of the points I wanted to bring up or wanted someone to bring up so reputational issues right because as you point out um if if you&#39;re an investor in a fund let&#39;s say GP uh XYZ what how how is that going to affect your your relationship with GPX YZ if you then sell that fund are you going to be able to enter into their next fund or are they going to lock you out forever those are all types of things that you have to think about so we so those are those are exactly the types of things that the board members of this endowment would be wondering um so the other the other question now is we understand the markets have stabilized uh the endowment is not as overallocated as it as it was before why is it that they still are complicating uh comp contemplating the sale Orin actually I just joined the course oh okay sorry half an hour right next to you I think also because uh to concentrate the management time of the lp Fund in less number of funds yeah that can uh bring a greater return sure so it&#39;s a portfolio management issue in terms of administrative costs making sure that they have a reasonable portfolio that they can monitor yeah just for liquidity calls and real estate assets not exactly exactly and let&#39;s remember that the the Market&#39;s been relatively quiet so there haven&#39;t been that many capital calls but it&#39;s the possibility that those calls could increase going forward anything else yep there this concern about motivation of certain GPS funds which were very far from reaching the uh the the threshold to get the profits exactly so um he&#39;s thinking that there&#39;s some of these groups that are just not going to be motivated to do anything and so the performance going to suffer MH uh the endowment also had distribution commitments to the beneficiaries of the endowment that in in that particular year was difficult to to do because there were there weren&#39;t many exits from those fund that&#39;s exactly right exactly anything else okay the other thing you might want to consider is right now the Market&#39;s relatively quiet what happens if uh there should be a rush to selling let&#39;s say some financial institutions decide that they have to get out of private equity and suddenly they dump a lot of paper on the market that&#39;s of course going to affect pricing as well so you sort of have to consider all these things in terms of timing a potential sale so we&#39;ve decided to sell the the board is is backing uh the decision everyone wants to move forward what are some of the options that this endowment has in terms of carrying out this portf portfolio sale what are the different types of ways they can go about it any volunteers I actually have a question go for um so when you&#39;re looking at you know there&#39;s a list of some of the Investments that they were considered non-core and that&#39;s I guess maybe marked for potential disposition um what type of assumptions are you making about how accurately or recently or fairly um portfolios have been marked to Market sure valuations yeah that I mean and that&#39;s a good question the the issue is you you only have the latest quarterly information so basically you&#39;re counting on your general Partners latest quarter reports and so you have to essentially evaluate that we&#39;re going to go into that when we talk about essentially evaluating the portfolio but that&#39;s a point to keep in mind that you only have the latest quarters reports and you do have to keep in mind what has happened since that latest quarter so yeah go ahead uh I don&#39;t know I think there are a couple conflicting issues so from a pricing standpoint you&#39;d want to invite as many people and players as you can into maybe an auction or something where you can provide them with adequate information for them to participate yeah uh but then back to the confidentiality and rep ation risks uh maybe you don&#39;t want to spread out the word too much yeah uh and and finally there&#39;s also the legal part within your contract so within each of the GPS you work with there might the the the partnership contract might have restrictions to only being able to sell to other investors within that fund or something like that sure so if we if I summarize what you said um number of options maybe one of them is to run your own auction right that&#39;s one of the things and then we can talk about the pluses and minuses of that one the other one that you alluded to is maybe you can just contact one buyer and deal with them oneon-one we could talk about the pluses and minuses of that one the other thing you can do is yep you can approach the GP about purchasing the interest uh yeah or approach the GP about facilitating exactly exactly so that&#39;s the third option y or they can contact Diego and you guys can there you go I was waiting for someone to say it okay so th those are your four options essentially and I wonder which one we&#39;ll choose um I would go with that so what are the pluses and minuses let&#39;s take the first option what are the pluses and minuses of actually I&#39;ll go with contacting the GP right away what what what would be the pluses and minuses of that on the plus side you might get you you get them to approve it straight from the start they&#39;re not going to have any have fewer problems if you probably go through them yeah they won&#39;t be as concerned about you spreading it out to people they didn&#39;t want the fund that can approve the selleries you you keep the relationship going with them they probably have they can help you with the pricing aspect of it the person who&#39;s buying from you has more leg can pay a higher price maybe if they feel they can get more legitimacy information more legitimate information from or more information from the G and so just the whole thing sort of seems like if they if they want take the time for you it probably helps you get a good price sure sure and and let&#39;s also remember that the GP does have the final say in terms of the transfer so if they work with you you&#39;re pretty sure that they&#39;re going to say yes to the transfer what would be a minus though working with the GP approaching the GP one of the things oh sorry go ahead the GP probably don&#39;t have anything to gain on participating this sale that&#39;s exactly right I mean um the GP if they want to help you out they will but essentially once you decide to sell your interests and those of the GP have diverged because you&#39;re trying to get the best price for your assets the GP is probably going to be more concerned with getting an LP they like into the fund regardless of the price they&#39;re not necessarily going to go around and and uh uh and manage a full process for you it&#39;s not what they&#39;re getting paid for so so that that&#39;s the issue you may have some you may have some uh Divergence in terms of uh overall goals yeah just a quick question when a secondary Sal occurs is the returns for the second LP um function of his cost basis or is it you mean the selling LP the purchasing LP is I&#39;m sorry so the purchasing LP how would they calculate their Returns on a fund oh essentially the price that they buy it at um because at the moment that they buy it they own the interest outright however the position is at the point how how funded it is how uh the distributions are in the past so it&#39;s not really that that&#39;s gone they basically buy it at time x and everything that happens after time x is their return so for the GP if if the secondary LP actually buys it at a lower price they reflect a higher return yes well they they can and that&#39;s one of the the issues but yeah if you buy something at uh at $7 million and the and the current nav is $9 million you in theory can mark it up by $2 million on day one so yeah sorry go uh how do the GPS usually react to that cuz um if if they feel that you&#39;re kind of in the bad they&#39;re on the bad side of your portfolio you perceive them as such they&#39;ll probably just try to sell you into retaining the investment and why it should stti with well yeah exactly and those are all these sort of the minuses of working with a GP I mean essentially if you&#39;re telling a GP I don&#39;t really want to invest in you anymore their incentive to have an ongoing relationship with you is not that great and they&#39;re certainly not going to you know break their backs yeah add be had a situation in our fund where it was um the G the one Alps was actually going to default so it&#39;s kind of a situation where it certainly was beneficial for us as the GP get them out get new have to that&#39;s a great Point that&#39;s and and we often uh deal with situations like that where GPS come to us uh we find in those situations the GP sometimes prefers to find an agent that to sort of handle the process which basically facilitates everything they find we find a solution and they don&#39;t have to get too involved um so we&#39;ve talked about the GP approach directly let&#39;s talk about the um direct auction so basically you uh here at logo you decide to have an auction on your own and contact as many buyers uh what what are some of the pluses and minuses of that one anybody probably it will be a very competive Pro because there are so many potential buyers everybody will be then probably increase the price on the other hand you will give so much information to everyone exactly and everyone out there will know that you&#39;re selling and that could be one of the issues when we talked about confidentiality and reputational for for the uh the Board of Trustees at logo that could be uh something that they really wouldn&#39;t like so you do you do get out there you get different prices from folks but at the same time everybody in the market knows what you&#39;re doing um the other option is to just go with one potential buyer but I think it&#39;s pretty obvious sure it&#39;s confidential so you solve that issue but the problem is how do you know that you&#39;re going to get the best pricing by just going to one secondary buyer out there in the market um and so finally the last option as uh we alluded to is using an agent which to a certain extent can solve some some of the issues um you&#39;re going to have a full auction process so you know that uh you&#39;re going to get more than one price uh by using an agent you can probably you can stay hidden from the Market because the agent never discloses who the seller is so you you resolve these two issues you get uh you get a more diverse pricing set so um so those are the the the ways that uh uh sellers think about um the sale process so let&#39;s um let&#39;s uh change uh sides now and let&#39;s take a look at the situation from the buyer perspective so now um I want you guys to um to to place yourselves as a potential secondary buyer and let&#39;s look at the portfolio that uh that we see that we have if I can dig it out well first of all who are the who&#39;s in the buyer world the secondary buyer world let&#39;s let&#39;s break that down who are the potential folks out there um yeah go ahead um other L fund the funds okay so um so let&#39;s say funds of funds right so primary funds of funds so guys who typically invest in other funds on a primary basis why are those guys buying secondaries it&#39;s not their traditional business why would they be buying secondaries one reason might be uh if if you have other LPS who are selling at distress prices because of the denominator effect or if they want to get out of investment then they might be able to sort have some Arbitrage they can they can pick up a a asset that they like at a discounted price yep for B market you usually don&#39;t have the J curve because it&#39;s uh more mature fund and in uh in and it&#39;s probably on on five to to seven years periods holding periods can have a better liquidity than inves in a new fund so usually a lot of primary fund funds um put aside a bucket of say 20% of their capital to invest in secondaries exactly for that reason so they can achieve a bit of a higher rate of return by investing in more mature assets so that that&#39;s so fund of funds let&#39;s put as as one group of secondary buyers who are some of the other secondary buyers well there&#39;s obviously the dedicated secondary funds right we&#39;re talking about the collar Lexington landmarks those guys so those guys do nothing but by secondaries what kind of assets are they looking for typically um anybody Daniel what kind of assets do you know that that typically secondary funds are looking for um I wouldn&#39;t know um anyone else can help them out well the go ahead probably distress well yeah this maybe but if let&#39;s think about what a secondary fund is trying to do um essentially they are giving their limited partners [Music] um the the the idea of a secondary fund is to buy more mature assets if you&#39;re buying more mature assets you&#39;re essentially giving your limited partners quicker distributions so the the types of assets that those guys are really focused for focused on are older assets more mature funds so they&#39;re not looking to buy something that was just raised they&#39;re different game than the typical fund of funds yeah I have a question I&#39;m not so familiar with the secondary fund space so given what you said about looking for more mature assets so uh interested in in funds that we having distributions coming due soon via a sale or something like that so would that basically imply that if I was a secondary fund manager or MD I&#39;d be looking to find sort of LP investors with within those ones who are having liquidity issues that the is that the primary way they get into to to dealers um no I mean they can get in through through the deal in any way as what I well the point that I wanted to make is that if you&#39;re a secondary fund you&#39;re going to let&#39;s say for example you want to buy a bane fund right uh bane just raised fund 10 a couple years ago now that fund has been only about 20 or 30% invested a lot of the capital is still still sitting there that is not of great interest to a typical secondary fund they&#39;d prefer to buy say Bane seven or Bane 8 where something where they know the distributions or they hope the distributions are going to come relatively soon so those are the types of assets that they&#39;re looking for now if they know some of the other LPS in those funds sure you can you can contact the guys who you think might be distressed and try to strike a deal there so okay yeah question would you would it be possible to map the sector in terms of secondary and why assets are being besides the fact that you know they&#39;ll be looking at because if there is a market and there are sellers you know there is no Yi they going to be people that are going to go there because if there is not enough buyer the price is going to be relatively lower than the market I&#39;m sorry so basically the main question is there enough buyer compared to the seller well that&#39;s that&#39;s the issue that we face in the market today in the market today we have more buyers than we have well we have more people who want to buy than people who want to sell I should say so that&#39;s what&#39;s affecting pricing that&#39;s is driving pricing up because there&#39;s a big demand for secondary Capital with a large secondary funds that have been raised Goldman raised a $5 billion fund Lexington is on its way to 5 billion there have been a whole number of new secondary funds have raised big pools of capital and they&#39;re looking to in to deploy that but the mark the sellers have been relatively cautious in terms of selling their assets so that&#39;s that&#39;s creating a lot of the pricing imbalance that help y going back to the previous topic can you speak a little bit more about the Dynamics of unall capital because it can be both sort of asset and a li yes yes in fact we&#39;re going to go right to that when we talk about pricing so there&#39;s a whole little exercise that I&#39;m going to go through and I&#39;ll address that point and if I don&#39;t please remind me okay okay um so the last group of that I wanted to talk about in terms of buyers are the opportunistic buyers so these are the other endowments and foundation so for example logo itself is a buyer of secondaries so um that that&#39;s s essentially our buyer world now we&#39;ve talked about the motivations the secondary guys are looking for uh older more mature assets the fund of funds guys are looking to supplement their investing with something that&#39;s also older but now the the endowments and Foundations are pretty uh agnostic they&#39;re really looking for the types of GPS that they like they want to have continued exposure to if we look at the wish list that we have from logo it&#39;s essentially a a mix and match of different types of funds and different maturities and obviously what&#39;s driving it is really uh their interest in those GPS so in looking at this portfolio um given what what I&#39;ve been talking about we can look at the portfolio in in a number of ways we can sort of break it up and see how we would how we would classify this portfolio so now we looked at it at the point of being buyers now I&#39;d like for us to think about if we were the agent on the deal and we&#39;re going to structure a transaction here so we&#39;ve talked about we know what logo wants to do we&#39;ve talked about what the potential buyer world out there wants to accomplish so now as the agent we have to bring them together together and we have to make sure that this is a successful transaction so how do we go about doing that um the key is really to match assets with demand so um in looking at this portfolio does anyone have any ideas as to how one would classify These funds what fits together what may not fit within this portfolio what looks like kind of an outlier if there are any or or how you would think about packaging something like this all right oh yeah go ahead I guess at a very high level there kind of I saw just GL see two categories one is kind of venture which seems to be much older vintages um you know maybe they&#39;re just taking a while to pay out or but it&#39;s certainly to drag on any um LPS return since they&#39;re all like 99 2000 the category generally more recent vintage buyout funds um of varying reputations uh some of which it looks like you know have been their nav is just quite low compared to how much has been contributed yeah MH yeah I think that&#39;s uh that&#39;s great I that&#39;s sort of how I looked at it as well I think I would probably um take some of these Venture funds and package them together because they don&#39;t necessarily fit in with the other buyout funds so probably your Austin Ventures your Menlo Ventures your Oak and uh maybe and the US Venture Partners you could put that together as one portfolio um anything else how about the rest how does everyone feel about the the rest of these funds y go ahead I&#39;ll probably also break down the uh large bio space into European and US funds that&#39;s another possibility depending on what buyers are looking for exactly any other ideas yeah I would also look into the division between how how how much percentage of the fund has been unfunded versus funded to Target different that and that&#39;s an important point because remember unfunded and funded go to very different types of buyers so the unfunded in here uh would be your Advent International um your Silver Lake 3 uh the Madison Deerborn and the tpg so you might want to strip those out and do something a little different so I mean that&#39;s just some ideas into to how we would look at the portfolio obviously we&#39;d have to dig into each of these assets and and uh and uh and do a little more work to figure out what the best solution is but as the agent the first thing that you&#39;re going to do is essentially get all the documents from the seller meaning and the documents that you need for the latest quarters the latest quarters um yep sorry go ah just as an agent your job description include take a look at the funds and going back to your client say you know what I wouldn&#39;t invest those funds as you know Advance track record whatever in China has been truly amazing yeah and I know you need quity but this fund can potentially you know BR a lot of money for you you can go P your client not to sell a portion up yeah usually it may be uh the other way around I mean if if something&#39;s a great performer then we might then the idea is you might get a great price for it so you might sell Advent at a nice premium to nav and so therefore it still might be a good sale even even if it it does have great Prospect uh you might however tell them I wouldn&#39;t sell this fund because there&#39;s uh two portfolio companies that are essentially um public and whatever price you&#39;re going to take no one&#39;s going to pay you nav for it so you&#39;re going to take a discount on something that&#39;s already public so you you should just hold on to that that that&#39;s the type of advice we give often yeah do you verify nav um so I was just going to talk about that what we do so we collect all the the latest quarters nav financial statements um capital account balance the we look at the GP uh reports annual reports we look at subsequent flows and distributions and we look at the LPA our job is not to we&#39;re not a valuation shop so we&#39;re not say a Duff and Phelps that&#39;s going to give you what the intrinsic value of this portfolio is our job is to tell you what the market what what price you might obtain in the market so we use the information from the documents as well as transactions that we&#39;ve done in order to give you sort of a range of where the portfolio might trade yep perhaps a bit more basic question but could you please clarify some of those um you know categories because for instance DPI or tvpi is not very clear to me oh sure no problem uh DPI is uh distribution paid in so basically if you look at uh if you look at Austin the distributions are 0 4X of what they&#39;ve put in it so far and tvpi is total value to pay in total value is what is the nav plus the remaining commitment okay um so we&#39;ve done the analysis for logo where the agent we&#39;ve done the analysis for logo we give him an idea of where the portfolio is going to be priced um now basically we we they they have to figure out on their own what they&#39;re going to do so they they decide to to go ahead with the sale now I&#39;ve said to you that the market is extremely inefficient and so let me um let me give you an example slide 23 I kept on stressing the fact that we really have to find the right buyer for these assets so these are some examples of of funds that we&#39;ve traded recently um and uh we kept the name somewhat uh somewhat out of it but you just look at the the pricing differential um I I can just this is a bane N9 that we traded uh not uh not that long ago and the pricing that we obtained from a buyo was a 33% discount to the March nav but what&#39;s interesting is look at where some of the other pricing was it&#39;s as far as far down as a 70% discount to nav so we&#39;re dealing with a very inefficient Market where pricing is really all over the board and in order to to transact at the right price you&#39;ve got to find the outlier so again this is the idea of really being focused on specific assets and matching the right assets with the right buyers the price that we sold um the Bane 9 was to a family office that was essentially interested in getting into Bane so they weren&#39;t a secondary buyer they had a they had a close relationship with the partners at Bane they wanted some exposure to them and therefore they were willing to pay a price that was uh a bit higher than the market now you might look at this and say well why would anyone pay a price that high they they must be silly they uh they why are they doing that well essentially these guys are thinking that um we we have a market clearing price because a lot of the guys offering the 60 70% discount they&#39;re offering the price but they&#39;re not transacting at anything so you you&#39;ve got to look at the motivation of the guys who really want to be in the fund and therefore are able to offer a market clearing price so we&#39;ve talked about how the a assets fit together let&#39;s let&#39;s look at each of these portfolios separately let&#39;s say for example that we went um along with uh Lisa&#39;s suggestion and we stripped out the The Venture fund so we&#39;ve got we&#39;ve got a portfolio of uh about 28.5 million if I did the calculation correctly about 28.5 million of a few Venture funds with not much of unfunded except for men low 10 so that&#39;s a portfolio that we could Market to one group uh we talked about a possible European bucket um we talked about the unfunded assets which we can Market together as well um so in the end we decide on three buckets let&#39;s say we just go with the The Venture funds the unfunded assets as well as what I I&#39;ll call the rest is the main portfolio the reality is the way we typically do these is much more uh much more complex we have different sub portfolios that we offer to different buyers we do a lot of sort of mixing and matching in order to get the best price but I&#39;ll keep it a relatively simple here now um in talking about pricing um so pricing is reflected as a percent of nav we talked about premium and discount to pricing um and there&#39;s a lot of talk whether funds are trading at a premium or trading at a discount It&#39;s relatively misleading and can anyone sort of elaborate on why it&#39;s misleading to talk about the overall market trading at a 10% discount or whether 20% discount is a good price or it&#39;s a bad price whether a 10% premium is a good price or a bad price it&#39;s one of these things that&#39;s thrown out in the Press quite a bit but it&#39;s it&#39;s very misleading to think about the market that way can anyone sort of give me an idea of of why that is yeah I can think of two reasons one is the fact that many transactions wouldn&#39;t necessarily be occurring at those prices right and the second is you&#39;re you&#39;re taking a snapshot view of a portfolio but what you&#39;re buying is a claim to cash flow that&#39;s being realized in the future which doesn&#39;t necessarily correspond to the valuations today exactly exactly yep go ahead who values those portfolios their own GPS Val the GP value then I think that&#39;s probably reason yeah that&#39;s another reason I&#39;ve seen funds that smaller funds South America with you know raising Capital that LPS require a third party advisor to to fund so that you know right right and and the other thing is yep go ahead now so you have a private company that&#39;s not public trade it&#39;s not open uh for you to evaluate this NIV you&#39;re not doing every quarter from independent audit using or the book value or some value that uh does not follow what&#39;s today right so the NIV doesn&#39;t actually represent uh the V of this company right exactly so let&#39;s say for example that uh you&#39;ve got a position that&#39;s uh as of q49 was valued at $5 million and you get a price of a um a 20% discount and then this quarter you get a price of a 10% premium well it doesn&#39;t really matter because you&#39;ve got to look at how the nav&#39;s moved so if the nav went from 5 million to 2 million then your 10% premium is really not a better price than the 20% discount you were going to get last quarter so people often fail to take that into account and throw out these premiums versus discounts as if they&#39;re sort of absolutes but you really have to pay very close attention just to how the nav is moving from quarter to quarter yeah is it possible and do you actually do this to actually calculate the nav today based on the information that you have from Beav quarters and public information we do we do an estimate of where we think the nav should be um and also take a look at how soon some of the realizations are going to come come into being because that that&#39;s very important when you&#39;re going to get some distributions so those that&#39;s all part of what goes into play but you do have to take into you do have to depend quite a bit on the gp&#39;s valuations because we we can&#39;t pretend to know more than the GP follow up very basic question too about na is let&#39;s say you have a private company how does the GP value that is that based on cost or is that based on a DCF valuation different GPS do it different ways some you know some are using DCF some are using um uh comparables so GPS always in their financial statements they&#39;ll have a full explanation of how they value those companies uh usually looking at comparables yeah what about when you have a deal that&#39;s a club deal and you have multiple GPS valueing at at different uh marks that happens it happens and so yeah I mean and that&#39;s in a case where basically you know you find the gp&#39;s got value the highest and you think maybe I should sell that one and uh it&#39;s it happens once in a while yeah does the volatility in the NAB or like if it&#39;s an industry focused fund so it&#39;s a media focused fund volatility in the na the market pretty much closely yeah I find in in general if I look at what happened over the last year I find that GPS T tended to have been quite aggressive in marking their portfolios down um so um what we notice let me see if I can find a slide that tracks the nav D do you remember what page that was on um what we noticed was that slide 18 if you take a look at here this is the nav evolution in the last in uh 08 and 09 so you saw in q48 a pretty aggressive markdown in the navs on especially in the large buyout sector uh and then there&#39;s been uh and then those guys have tended to uh to start writing things back back up we don&#39;t have q409 but it was probably up another 5% in q49 so uh yeah I think it it does mirror yeah so just a quick question so on large buyout q1 of 09 down 5% what what happens when you have a situation where the sponsors are telling you we&#39;re down 5% and the debt markets suggest that they&#39;re down 35% or or even 100% yeah well we dealt with a lot of cases like that where we saw a lot of funds that you know we knew the numbers they were publishing were just you know didn&#39;t make any sense you know they were essentially relying on comps to P to price their assets but the equity in their deals was worthless so we saw that quite a bit and and that&#39;s why at that time in in q48 q19 you were if you tried to sell a large buyout fund you were barely getting any I mean try selling Blackstone 5 at that time and your price was probably around zero so yeah how much information do the biders in the secondary Market have to be able to have assessment and what should be the bidding price and yeah um the biders come in are really in two groups some of them are in the funds already so they have the information they are able to talk to the uh the GPS they&#39;re able to have the conversation the dialogue and and sort of uh have a walk through uh portfolio Company by portfolio company the others are taking a look at the docs um and trying to organize calls with the GPS uh GPS come from you know different all shapes and sizes some guys are very open to having that dialogue with the potential buyer others are not that interested so essentially these guys have to make a call at the end of the day as to how much information they have yeah what percentage of your clients are like Gatekeepers not LP themselves but yeah um that&#39;s actually a good question uh last year we saw a big jump up in terms of uh Gatekeepers and actually I think we&#39;ve got a chart on that too um the reason being that a number of Pension funds and uh started to be more active in buying assets but they can&#39;t they don&#39;t really have the wherewithal to price these things themselves so they have they hired their uh their agents and Gatekeepers to do that so some of the groups that are relatively I mean really you name it you know Cambridge Associates and uh all those guys have been very active in in U pricing assets for their clients 6% yeah now that makes up 6% I before that it was it was negligible but now they make up 6% of 6% of buyers okay so continuing with our sales scenario and by the way way I before I I go on um so we talked about the pricing being done at at reference point the quarter ended all subsequent calls and distributions are netted against the price is is that that pretty clear to everyone if it&#39;s not so let&#39;s say your fund uh Q4 let&#39;s say in q48 your nav is $5 million if there was a call of a million dollar after the after that uh that reference date then that is actually netted against what the uh the buyer pays calls and distributions are netted so um so what I wanted to do is give you an example and talk about sort of the pricing that that and and also the unfunded um so let&#39;s say for example that um this and this is where we&#39;ll we&#39;ll get into the unfunded and and how pricing pricing affects so let&#39;s say there&#39;s a fund uh XY y z um that&#39;s a $50 million commitment at December 31st uh 10 million of capital had been called and the nav on at that date was 8 million all right so 10 million&#39;s been called the nav&#39;s 8 million um and this is all at December 31st 2009 then on February 1st another $2 million is called so we&#39;re trying trying to sell this for a limited partner the highest price that we get out in the market is $4 million okay can can everyone tell me the different uh how we would talk about the price here so what what would be the base price how would what what would we quote as a base price let me just repeat it&#39;s $50 million commitment to a fund 10 million of capital has been called the nav is 8 million at December 31 on February 1 there&#39;s another call for 2 million we go out there to Market this everyone&#39;s looking at the December 31st date and the highest price we get is4 million so what&#39;s the base price well as as a percentage of nav how would we say the the what&#39;s the base price what&#39;s the sorry 50 exactly the price is 50% so the the price that is being offered out there in the market is 50 %. but let&#39;s think about the adjusted price and let&#39;s see if you you guys can figure out what I&#39;m what I mean so granted the base price is is $4 million but how much is the seller actually going to receive when the deal closes let&#39;s say the deal closes on March 25th okay how exactly so the seller is going to get 6 million everyone get that because of the $2 million call so therefore what is the adjusted price uh well let&#39;s think about it so the seller is going to get 6 million and their nav or their value is the 8 million nav plus the 2 million so 40 60% 60% so 40% discount is going to be the adjusted price okay so that&#39;s how we look at these different issues of pricing now um another way to think about things that are relatively unfunded because when you&#39;re looking at a position like this where 40 million of the capital still hasn&#39;t been called what&#39;s the goal of the seller a seller here is really trying to get rid of all this Capital commitment that&#39;s sort of lying around that they&#39;re the the for some one reason or another they they want to get rid of so we often want to talk about discount to Total exposure and I think this is the point that you were making earlier so we&#39;re want to talk about discount to Total exposure so let&#39;s think about total exposure total exposure is your nav plus your unfunded liability so what would the discount to Total exposure look like on something like this so basically what does it take for me to fund this 40 million that you need to fund well the way I would word it is what penalty do you have to pay what price do you have to pay as the seller to get out of this $50 million commitment that you made in looking at total exposure and looking at nav plus unfunded because the typical way we look at the at pricing on the secondary Market is just to look at the nav but now in a position that&#39;s so unfunded we want to look at the total exposure because a lot of the exercise here is to get rid of that future commitment liability so what with the numbers that I&#39;ve thrown out I&#39;d like to see if anyone can figure out like what would the discount to Total exposure be go ahead so uh your total exposure is 48 million and you are get read of 46 would be a discount of 4.2% is it 46 or 44 everyone that okay close but all right so it&#39;s uh so it&#39;s 8% discount right did everyone understand how that was done is that pretty clear sorry go ahead question so in some cases they would like to reduce but in some other cases they don&#39;t have faith on the GP anymore like happen in yes how do how do nobody wanted to yeah that&#39;s a different situation in a lot of those funds frankly the GP lowered the fund size another example of that is a sun five where the GP cut the fun size by 20% because essentially all the LPS felt that they had given too much capital and they wouldn&#39;t find the opportunities to invest in that so it it depends on what uh you know what the overall uh the feeling in the market is out there but it&#39;s essentially kind of the same exercise yeah when you come down the fun side what happens to the Management Field that you already receiv on the orig um that&#39;s a good question that&#39;s a good question I don&#39;t think they&#39;re return ear um I I don&#39;t know what they did on sun 5 do you know David I don&#39;t know I don&#39;t know um so we so we&#39;ve looked at selling funded and unfunded get the idea of U of a discount to Total exposure versus the base price to naav so those are those are all um the way that that we look at transactions in U in our business the last part I want to really go through is sort of the closing and the transfer process and then I&#39;d uh open up to questions if anyone has anything they want to they want to cover um the closing process once you find uh once you have a buyer that uh um that uh you can agree with on price we move to usually the the purchase and sale agreement signed between buyer and seller uh which outlines the terms of the closing the price uh all the uh schedules that that uh uh um Define the position at the specific point in time um the uh one of the funds on here uh I believe has a right of first refusal it might be Silver Lake 2 how would you get around a right of first refusal if you&#39;re a buyer is that something can be done do you just uh or how would you feel about a right of first refusal if you&#39;re a buyer let&#39;s let&#39;s start with that actually yeah Char some sort of a breakup Fe or some kind of a I mean if you&#39;re going through all this work yeah yeah yeah usually breakup fre is hard to do but yeah you&#39;d want to get compensated for that depends on how much information I have so I I know that the are the fun like carment yeah you know people were actually selling you know you could yeah depends yeah depends yeah uhhuh go ahead uh if I understood correctly i&#39; feel pretty badly because of winter curse so basically if you if you bid for this and you set the price that someone can match and then the other LPS in the fund have more information if they know the price is worth it they can just close at that uh and if they let you pass with it it&#39;s because you gave a price that was too high yeah yeah exactly so right so you essentially are are setting the market price and then allowing everyone to come and take it away from you after you&#39;ve done all your work so it&#39;s not a nice thing to have so how do you get how can you potentially um get beyond that one of the things folks often do is if you&#39;re bidding for a portfolio and um you have there&#39;s multiple assets and one of them has a right of first refusal you basically assign prices to each fund and the fund that has a right of first right of first refusal you bid at a 60% premium and you&#39;re pretty sure nobody&#39;s going to buy it at a 60% premium right so you essentially allocate your pricing amongst the portfolio did everyone I see some blank stairs goe so so you you basically justy that yeah so it&#39;s not the the fund that has the right of first refusal refusal the right of first refusal you bid at a much higher price way above the market price and then you take away from the pricing of the funds I don&#39;t have a roer because it doesn&#39;t matter you can you could as long as the seller just wants their overall price so they don&#39;t care how you allocate the different prices among the different funds but for the fund that has the roer you have to alert the GP the seller has to alert the GP to say that I&#39;m selling this fund at this specific price so then when you allocate the pricing among the different funds the seller can say to the GP I&#39;m selling your fund at a 50% premium who&#39;s going to do better than that would thater the risk of in what sense purchase yeah you&#39;re to purchase five funds and it&#39;s a package so yes yes question for that that only holds obviously if the sell bundling portfolio in but then as a seller probably want to break down portfolio because I try to maximize different funds I mean then well there&#39;s a tradeoff WEA stru yeah it depends I mean um You probably you&#39;re going to want to break up funds but that doesn&#39;t mean that you&#39;re going to want to sell funds individually you might package say four or five funds together and find a buyer that&#39;s really looking for that package and when you have that package then you can you can diversify the price between buing everything selling IND exactly exactly are there any liability issues associated with that if you&#39;re sort of allocating value disingenuously um I mean to be honest with you not sure that it&#39;s real well I don&#39;t know it&#39;s a good point never and do we have a lawyer you know I mean you&#39;re you&#39;re really just allocating assets it&#39;s not like it&#39;s not like you&#39;re saying this is uh it&#39;s not like the market always says that this is worth that let&#39;s say for example you sell let&#39;s say these guys had sold Bane 10 at a 50% discount does that mean that Bane 10 is worth 50% of the nav does that mean that Bane 10 has to write down their nav because that&#39;s the price at which it sells out not necessarily it&#39;s really just it&#39;s just a market of buyers and sellers so it&#39;s not really setting any um um it&#39;s it&#39;s not really sort of setting a market price or or selling a a valuation which is what I what I&#39;m trying to say y go ahead so this raises a question of like the secondary Market that&#39;s developed for private equity for LP interest has caused changes or you know make some terms in fun funds less favorable than they used to be are there any others other than the one you mentioned that have come under scrutiny or have changed since this Market&#39;s developed I&#39;m sorry you mean the the GPS or so actual terms like you said the writer first refus difficult in context of a secondary Mark is is this the only term or have yeah we&#39;re actually seeing fewer rights of first refusal because the right of first refusal is a bit of a pain for the GP um the the reason they started it or a lot of them had it was because um some of the big secondary firms basically started saying to a lot of L GPS we&#39;ll invest in your fund but we want to make sure that when there&#39;s a secondary I mean they they would say We&#39;ll invest in your fund on a primary basis but we want to make sure that when there&#39;s a secondary we have access to it so the GPS wrote it in the LPA that oh let&#39;s put this right at first refusal to make sure that these guys have a first look whenever there&#39;s a secondary the problem now is all those guys who have rights of first refusal it&#39;s a huge administrative nightmare I mean to to because so many people are trading These funds right now can you imagine being in Sun 5 uh we traded over 150 million of of uh of commitment in Sun Five last quarter or or two quarters ago it&#39;s if they had had a roer it would have just been a huge administrative nightmare for them so a lot of we we&#39;re seeing a lot of GPS actually moving away from these types of things um the the only issue we come across where GPS may be a little bit sensitive to the secondary Market is if they&#39;re actually currently fundraising one of their another the subsequent fund uh because obviously if you can go into fund xus one you may not go into if you can buy fund xus one you may not go and invest on a primary basis and fund X so so a lot of times they might say while we&#39;re fundraising we&#39;re not allowing any transfers that that&#39;s one of the things that we&#39;ve come across that&#39;s probably the most important one to answer your question yeah so this uh how how do GPS get around the trick that he just mentioned uh if there&#39;s a right of first refusal and if a secondary buyer is putting a premium on GPS would probably get upset if that is no no not really GPS don&#39;t really care um I mean because remember the GP ultimately always has the final say in terms of whether they want to allow the the lp or not right no matter what the price the the GP allows the transfer so if it&#39;s an LP they definitely don&#39;t want then even if you&#39;ve way over bit on the pricing you&#39;re still not getting in so the GPS don&#39;t really care about what pricing you get like I said if if they had been trying to please you know a secondary buyer who wanted to have access to the funds well if it didn&#39;t work out didn&#39;t work out it&#39;s not the gp&#39;s fault um and like some people have already alluded to sometimes just being able to facilitate the exit of an LP that couldn&#39;t uh couldn&#39;t commit or was facing default uh GPS prefer to just find a solution to the problem that&#39;s generally what we find yeah 32 or place you have to register any secondary transaction uh more and more um well I shouldn&#39;t say more and more but some GPS are starting to work with uh qualified matching Service uh the reason they do that is to not um exceed the amount uh of any fund that can be traded in a given year uh certain funds uh there&#39;s actually I I don&#39;t know the details of the law but there&#39;s a threshold that a fund can&#39;t be traded at more in a given calendar year and after you exceed that threshold there is a possibility that the fund may lose its exempt status so obviously that would be the worst situation imaginable for a general partner uh so in order uh to manage the transfer of funds they set up a qualified matching service which often times means that only a specific amount can be traded per quarter and usually it&#39;s every quarter ends sometimes every half year and the GPS monitor the volume very carefully so for some funds that have been heavily traded you can have a backlog of things that are waiting to be um transferred at a specific date there&#39;s a number of funds that we traded in um March or April of 09 that closed Jan Jan 1 2010 because we had to wait for the uh for the the the G the window to open up for the buyer and the seller it makes no difference it doesn&#39;t matter because the the moment you sell the moment you sign the purchase and sale agreement all the cash flows get cheed up so you just have to wait a little bit longer to actually get your money but it it the situ the the sale happens at that date anyway yeah so I think this gdlp relationship is quite similar to what we see in bank loan or loan trading where in some cases let&#39;s say you&#39;re trading the bank loans of company X if you want to sell this to someone else the company management should approve this if they don&#39;t want this then the investment Banks usually write some kind of the contracts where you just pass through the cash flows and in return you get something yeah so you don&#39;t care about what company manag says but you do your deal yeah is thisable to yes it is it is uh there there have been issues where uh an LP wants to sell and uh the GP will not allow transfers so you do a swap essentially a swap agreement um it happens quite a bit there there are some um legal things you have to think about um they there there are laws that say that essentially if if you are getting the cash flows then you&#39;re the owner and you have to declare yourself as the owner even if you&#39;re not officially the owner so those are all things that you that that have to be taken into account uh sometimes especially if it&#39;s a uh um International investor there are other laws that that come into play so it adds a degree of complexity to it uh but it does happen quite a bit and and we&#39;d call this you know some we call it a structured transaction yeah don&#39;t you happen to have a lot of problem with tax issues because I was thinking for instance in Spain you have you have have very specific kind of of Corporation to conduct private activities so if you do this synthetic you would not be uh you wouldn&#39;t be eligible for the for the tax relief so I guess this should be that&#39;s a very good point and and I missed that that was another uh thing that we faced is and again especially on the international side where there would be tax issues involved so all these things have to be taken into account which is why the majority of the market functions as straight sales um there&#39;s a lot of talk about structured transactions but often times the the legal fees associated with these with these transactions are just prohibitive and so most of the market is straight sales yeah if you project forward say 10 15 20 years how how do you see this Market do you see it becoming an efficient market very liquid very low spreads a lot of Regulation or do you see it remaining as this just the oneon-one negotiated transaction yeah uh 10 20 years that&#39;s I don&#39;t know I I don&#39;t even know like next year what this Market&#39;s going to look like but um I think my feeling is as long as the general Partners have the uh keys to the information and the final say in terms of the transfers that this Market will tend to continue to be highly negotiated um there have been some there have been some efforts to uh set up uh things that are close to exchanges try to transact these uh you know on broker screens uh uh or online or things like that uh to a certain extent I think that stuff is still relatively a very minor part part of the market um and and most of it is really more of this type of Highly negotiated one-on-one type transactions and again I think that&#39;s because um the GPS have the final say and and the the information out there is quite asymmetric you know yeah so by you know selling secondaries and helping B funds yeah you probably have a pretty good of the market of the what of the per Equity Market yeah uhhuh so the question is what the tri was ever thought of becoming a beekeeper or not and what would be your results yeah I mean um I we we&#39;d have to fundamentally change our business uh probably have like the knowledge and the network if you ever decided to ship your business storage BEC so mind and what make sense yeah well the difficult part for us would be that um half of our business has been uh relationships with General Partners so we&#39;ve raised capital for them we&#39;ve given them strategic advice things like that uh how to raise their fund how to structure their funds uh one of the things I didn&#39;t talk about but we work a lot with uh new funds we we worked with very large family that was that had a public business and they wanted to start wanted to create a private Equity Fund so we worked with them for over a year in terms of the issues they would have to think about so because we&#39;re very um we&#39;re an adviser to the GP Community as well it&#39;d be difficult for us to to become you know a paid advisor on the lp Community also in terms of them investing in funds you know and being a gatekeeper but um you know our business is always evolving but that&#39;s not uh that&#39;s not an area that that we&#39;ve really kind of done much work on oh sorry yes go ahead um so I was just curious in light of uh you know some of the the New York pension SC I was thinking last year and of tightening rules around placement agents I was just curious as to whether there any lasting Fallout or and how you say the future no that&#39;s that&#39;s a very good point um lasting Fallout I would have to say no um I think for a while we were being cautious in terms of who we were calling and and uh you know who we were calling on and and getting in front of but um one of the things that I think&#39;s been rather positive about what&#39;s happened with uh with New York is that um uh it&#39;s tighten the standards of what a placement agent should look like um it&#39;s uh [Music] um the the goal was really for all agents to be licensed with finra uh all things that we&#39;ve had for a very long time so it&#39;s essentially kind of weeded out the folks that were just you know relying on on relationships and kickbacks and so on to uh to to get further uh in the business so for for us it&#39;s been a pretty good thing and and the markets seems to have reacted the same way yeah do you mind sharing broad information about what fees are like for secondary placements yeah sure yeah that&#39;s probably the most important thing um um yeah generally um the fees are a percentage of the P of the price or or the value that the seller receives so for example if you sell uh a 10 million nav fund at $8 million and you receive cash of say8 a half million because there were some subsequent calls uh our fee is a percentage of that uh 8.5 million and the fee is usually between 2 and 3% that that&#39;s the the general range yeah use for first team that you&#39;re fundraising yeah for fundraising it&#39;s uh similar uh well we do all types of different uh different Arrangements um but typically it&#39;s 2% on new money but you don&#39;t have SE work with anyam no no no work process kind yeah yeah sure uh we have um so we have Partners in all three of our offices uh whose job is really to monitor the market and uh find the GPS that we want to work with on a given year we&#39;ll probably work with uh 8 to 10 General partners and we try to diversify it in terms of uh strategy uh geography and size so we want a a buyout fund a venture maybe a venture fund these days maybe not um uh let&#39;s see uh energy mezzanine we want to work with some guys in Europe we want to work with guys in the Middle East so if you if you want to only do 10 funds there&#39;s only so many that you can look at so our partners are constantly on the road meeting with GPS we we find the ones that we really like uh we sort of run through the numbers look at the story we discuss internally whether we think this is a group that&#39;s going to work we have um our folks who deal with the limited partners figure out whether this is something that&#39;s going to have demand and then uh and then we&#39;ll basically pick a GP so that&#39;s the typical process so you had a question yeah I don&#39;t know if it makes sense but whether you&#39;re participating in any upsite say like if you&#39;re selling a portfolio that has an effage any you up 10 and you can be able to sell that for2 just what yeah yeah definitely um plus yeah yeah definitely we&#39;ve had many many uh agreements where uh if we can sell a portfolio at uh at uh at a 10% premium for every percentage Point higher than that our fee doubles or I mean you know incrementally doubles or something like that so yeah obviously yeah different I mean we try to the most important thing is to be aligned uh with our client which is why we want always take a percentage of the actual amounts of capital that they that they receive yeah what&#39;s the normal duration from start to finish on one of these transactions I love when people ask questions where I have a slide there um so uh typical I would say anywhere from 10 to 14 weeks um and that is um you know I can go through the St the preparation is really collecting all the documents um outlining a uh a price for the potential for the sell giving him an idea of what issues how the portfolio should be structured um the documentation is giving access to all the potential buyers uh the information that&#39;s out there the contacts uh were very focused on limited auctions we want to make sure that we invite the right people to the process not folks that are going to make the process dilutive um interim discussions is when uh uh the potential biders analyze the portfolios we usually give them about three weeks to do that and then the first round offer all auctions are done in a two- round process first round we weed out the guys that are not going to make it to the second usually second round is anywhere from two to three folks um again they get to do some due due diligence with the GP get to speak to the GP talk about the portfolio companies fine-tune their pricing and at the end uh the final offer is in the form of a uh binding letter of intent um review that with uh the seller uh any last minute fine-tuning and then we have a uh assigned Loi then usually you probably want to allow two to three weeks for the purchase and sale agreement that&#39;s when you get the lawyers involved those guys take a lot of time um you get your purchase agreement then you probably have to allow another 3 to four weeks for the GP consent so you have to send the seller has to send a letter to the GP saying I have found a buyer I&#39;m interested in selling my fund I found a buyer at this price maybe doesn&#39;t have to disclose the price dep depends on the terms and then has to wait for the formal okay from the GP once all those things are done you have the transfer and the closing and wiring and like I said 10 to 14 weeks it&#39;s typical yeah just a quick question how surgical is the GP is that kind of a function of how fun perform in the pth what is that yeah uh it depends so if it&#39;s a if it&#39;s a buyer that&#39;s already knows the GP and has followed them very well uh it can be pretty uh pretty light but if it&#39;s a a GP that they don&#39;t know and the fund documents are not all that clear then you&#39;re going to have some guys who really want to going to going to want to dig in and and uh do sort of a top down analysis of every portfolio company so it really depends on uh on the GP yeah curious if your two business L uh sort of helping GS raise funds but also helping LPS sell their portfolios do you ever come across had one presen the pfolio yeah and that&#39;s a good question um we had a situation recently actually where uh there was a a fund that we were raising and uh we had one client that had their prior fin portfolio and they were looking to sell it um Our advice given that we knew the GP quite well Our advice of the client was now might not be a good time to do this because as this fund is Raising currently they&#39;re going to be very demanding about the transfer and some one of the things that a lot of uh funds who are raising guys who are raising funds due they do they they request staple transactions in the sense that they say okay let&#39;s say you want to buy my fund two or you want to buy fund two from this seller I&#39;m going to say you can I&#39;m only going to approve the transfer if you also commit to my fund three it&#39;s called a staple transaction very unpopular with Buyers unpopular with with everybody um and the Market&#39;s really moving away from that but GPS some GPS are still rather adamant about that yes um given your position as a placement agent you probably uh you see a lot about what is happening with the fundraising situation and we have heard quite a bit about the the effect of the crisis on fundraising and private Equity yeah I mean fundraising has been quite tough David do we have any stats on latest fundraising environment I&#39;m not sure but it&#39;s been it&#39;s been a tough environment for sure um I I would say the areas of the fundraising environment that have been um probably more robust are distressed GPS raising uh for distressed investing uh secondaries investing has been rather robust uh mezzanine has picked pied up a little bit as well but on the traditional buyout side it&#39;s been it&#39;s been pretty rough going um and like I said earlier we try to have a pretty diverse offering in terms of the types of funds that we&#39;re offering to our clients so we were working with a group in the UK um raising a distress fund and uh they had a stellar reputation and we were able to raise that in three months and it was over subscribed and this was in 2009 in the in the depths of the the bad Market so um so there % 50% less so the overall overall fundraising environment was 50% lower in 2009 um so obviously it suffered and especially I would say on the uh the middle the buyout Market in general certainly big buec terms in term yeah we we probably saw um people being a little more flexible About Management fees uh we heard heard about groups uh getting rid of the 2% and and essentially defining a management uh Fee number that they allocated between LPS so that was something that was talked about um you know probably I think we&#39;re done with the 30% carry that uh uh that that doesn&#39;t seem to be happening Much Anymore uh those are some of the the things that uh that we saw do you have a prediction on how many bio farmers will go business um you know it&#39;s hard to say I I I sometimes I I looking back in uh in the 0 01 02 03 I thought there were a lot of groups that wouldn&#39;t have survived and somehow they managed to so I don&#39;t know some some guys make it and others don&#39;t but not sure the size that&#39;s true the size of funds has decreased that&#39;s for sure yeah there was a lot of talk about the denominator effect bringing down fundraising because of how out of whack it was relative to equities there&#39;s been a return of equities right you see the valuations come back up do you still think that that is going to be a cause of concern for for LPS or do you think that that&#39;s not a reason anymore for them not to continue investing in the private Equity Building I I think a lot of LPS have resolved more or less some of the denominators effect issues many of them still are slightly Overexposed um but not as much as they were obviously um I think it&#39;s still going to play a role though a lot of these guys um are looking at the situation rather carefully they don&#39;t necessarily want to do anything radical so they&#39;re sort of going to wait for the de denominator effect to solve itself over time so that&#39;s definitely that&#39;s going to slow down fundraising in my opinion one last question okay thank you okay thank you

Transcript for:Understanding Private Equity for Limited Partners

Transcript for:
Understanding Private Equity for Limited Partners