Today I had the pleasure to share a panel on Single Asset Continuation Funds, a type of secondary transaction that has become very popular over the last few years and that is being actively pursued in today’s difficult exit environment.
We discussed the merits but also the complexities behind this type of transactions. The International Limited Partners Association (ILPA) has taken the lead with its so called ILPA's Continuation Fund Guidance, a set of recommendations that are increasingly followed by market participants.
However, whether you are a buyer or a seller (as an existing LP), it is crucial to first focus on Deal Rationale:
- the Why - is the GP doing this?
- the When - is it the right moment in the fund’s and asset life?
- the What - is the deal structure / are the incentives in place etc.?
If all that makes sense, you should then ask yourself if the transaction achieves a WIN WIN WIN for all parties involved: the existing LPs, the Secondary Buyers and the GP.
Finally, one of the questions was about whether GP-leds are here for the long run or not, and the consensus was that this technology is here to stay. Some predictions even point to 80% (or more) of mid-market GPs doing a least one Continuation Fund in any given fund under mgt in the next 4-5 years.
I would like to thank my fellow panel members - Ngowari Adikibi (Partner, Stephenson Harwood LLP), Fay Margo (Chief Executive, Brackendale Consulting), Gilles Collombin (Partner and Head of Investor Relations, Charterhouse Capital Partners), and Gilles Morel (Managing Director, Jasmin Capital) - for the great insights and Private Equity Exchange for the opportunity to participate in this event.
The Private Equity Exchange is an event of Décideurs Corporate Finance, part of GROUPE FICADE, which brings together the whole Private Equity ecosystem for a unique 2 days of conferences, networking and awards, connecting over 1200 GPs, LPs, Entrepreneurs, Managers and Advisors.
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