Private equity funds are currently in the midst of a boom period, with a surplus of investor assets at their disposal. However, several factors – including a scarcity of deal flow and an increased demand by investors for decreased and customized fees – function as counterweights to this positive development in the industry. Additionally, while investors are increasingly interested in obtaining co-investment rights, private equity fund managers are forced to navigate risks of inequitable treatment that could flow from those arrangements. See “Co-Investments Enable Hedge Fund Managers to Pursue Illiquid Opportunities While Avoiding Style Drift (Part One of Three)
” (Feb. 21, 2014). The role of these incongruent interests and how private equity fund managers can balance them were discussed during a segment at Sadis & Goldberg’s 9th Annual Alternative Investment Management Seminar. The segment, entitled “Private Equity Ascending: Economic and Legal Developments,” featured Sadis & Goldberg partners Steven Huttler and Yehuda Braunstein. This article presents key takeaways from the discussion. For further insight from Huttler, see “Stigma Fades As Use of Gates Becomes More Common
” (Dec. 24, 2008); and “Gates Provide Safety Valves for Hedge Funds and Investors
” (Apr. 15, 2008). For additional commentary from Braunstein, see “Understanding the Benefits and Uses of Series LLCs for Hedge Fund Managers
” (Nov. 15, 2012).