Among the items addressed in the new and amended rules for private fund advisers recently proposed by the SEC, sponsors would be required to obtain third-party valuations of GP‑led transactions. That is a sensitive topic in the industry given that investors have long clamored for similar information, which is dredging up conversations and concerns about how to determine the fair value of those transactions. That is amid ongoing conversations about other timely issues with the transactions, including concerns about preserving alignment and avoiding conflicts of interest. Goodwin Procter and PwC recently addressed those issues and the status of the GP‑led secondaries market as a whole in a webinar featuring PwC Luxembourg partner Valérie Tixier; Goodwin Procter partner Alexandrine Armstrong‑Cerfontaine; Coller Capital principal Martin Fleischer; and Stuart Cullen, head of investment structuring at Pantheon Ventures. This second article in a two-part series outlines complicating factors when determining the fair value of a GP‑led transaction; issues related to conflicts of interest; and the importance of GP‑LP alignment. The first article
described the current landscape of the GP‑led secondaries market; the drivers pushing its growth and development; regulatory issues (e.g.
, the impact of the SEC rule proposals); and ways secondary buyers evaluate GP‑led secondaries. See our two-part series on the evolution and future of GP‑led restructurings: “Transaction Structuring Trends and Conflicts of Interest Management
” (Jun. 2, 2020); and “Key Considerations When Negotiating Fees, Expenses and RWI
” (Jun. 9, 2020).