Sit right back and you’ll hear a tale…
 
In this fictional account, Able Bentley Capital is a $500 million private equity fund (“ABC”).  ABC is formed as a Delaware limited partnership, and the general partner (“GP”) is ABC Partners.  (For a discussion of limited partnerships, see my post “LP Corner: US Private Equity Fund Structure - The Limited Partnership.”)  ABC makes a number of international investments.  Bill Smith is one of managing partners of the management company and a member of the GP.  Bill sources and leads several international investments.  It is common in international investments to have the fund’s investment flow through one or more intermediate (known as “blocker”) shell companies in order to shield the fund from negative tax consequences.  Using a complicated blocker structure, Bill was able to defraud ABC out of several million dollars.  The fraud was eventually discovered and after several years Bill was convicted of fraud and embezzlement.
 
Situations where a GP (or a principal of the GP or management company) behave truly badly are rare, but they do occur.  The question becomes, what should happen when really bad behavior occurs?  Read on to find out!
 
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Divorce, Private Equity style...

Private equity funds have long lives.  Private equity limited partnership agreements (LPAs) typically provide for an initial 10-year term, plus two one-year extensions at the discretion of the general partner of the fund (GP).  However, fund terms often stretch out for much longer, sometimes 15 to 18 to 20 or more years.  This is truly a long-term commitment, for both the limited partners (LPs) and for the GP.  For an overview of LPs, GPs and limited partnerships, please see my prior post "LP Corner: US Private Equity Fund Structure - The Limited Partnership."
 
Because funds stay around for a long time, things will change.  Partners may leave the fund’s management company; the investment strategy might drift away from the initial strategy; the investment performance may be terrible to the point that the LPs want to stop the GP from investing; the fund or management firm may be embroiled in a scandal; or in rare cases, the GP may behave badly (not illegally or in violation of the LPA, but in ways that may place their personal interests above the best interests of the LPs).  There are many other changes that can occur during the life of a fund.

To read more, please click "Read More" to the right below.

Thousands of private equity funds are being raised right now.[1]  For a fund in the market, that’s a massive amount of competition.  Limited partners (or LPs), the investors in private equity funds, are constantly meeting with general partners (GPs), the fund managers, to select the very best funds in which to invest.

This means GPs have little room for mistakes on the fund-raising trail.  A compelling roadshow is a key element to fundraising success.

Having met with hundreds of managers over the years, and after seeing the good, the bad and the ugly of roadshow presentations, I offer the following thoughts for GPs on how to have a successful roadshow meeting with an LP.
This article is geared to funds that will be institutional – $100 million or more marketing to institutions including pension funds, funds of funds, foundations, endowments and family offices. But most of the tips presented will also be relevant for sub-$100 million funds.​