With record amounts of dry powder chasing a finite number of deals and continued pressure from investors for returns, private equity funds are facing a highly competitive market on all fronts. General partners are responding by finding innovative ways of offering attractive terms at auction, meeting investor needs for liquidity and investing further in high-growth industries.
This issue of the Private Equity Report explores several current developments along these lines that general partners, investors and management will find of interest:
- Liquidity without Exits: Incentivizing Management for the Long Term
With long-dated funds growing in popularity and direct investing by alternative capital pools increasingly common, sponsors are developing new long-term incentive plans to meet the needs of all stakeholders.
- Introducing Full Equity Backstops to the PE Toolkit
As auction dynamics continue to place high priority on speed and certainty of closing, offering to fund the total purchase price with a full equity backstop can prove useful for sponsors looking to differentiate themselves.
- GP-Led Restructurings: Shaking up the World of Private Funds
GP-led restructurings have long been associated with underperforming “end of life” assets, but in recent years, GPs have been turning to restructurings to actively manage their fund’s portfolio while providing their investors with a liquidity option.
- Life Sciences Investing under Trump: Food and Drug Administration Developments
FDA Commissioner Scott Gottlieb, M.D., has launched sweeping initiatives to accelerate innovation and lower regulatory burdens. Nonetheless, PE investors need to stay mindful of a complex regulatory environment and hot-button issues like opioids and pricing.
We hope you find these articles thought provoking and helpful as you structure your own strategies for this dynamic market.