CONSULTING SERVICES

Many prospective fund managers know the business of investing, but do not fully understand the ins and outs of the business of a fund manager. Peter can provide guidance during the entire process of fund formation as well as insights into how a successful fund is implemented and managed. Typical assignments include:

Team assessment and composition strategy

For an institutional investor conducting due diligence on a private equity fund, the top three areas on every list of questions are manager, manager, manager.

Peter’s services include a thorough assessment of the individuals on the fund manager’s team, their roles, team dynamics and incentive structures in addition to a review of team member backgrounds, education and goals. This assessment is then used to evaluate the team’s culture, skills and mindset as individuals and as a group, and develop a set of recommendations based on gaps and strengths.

Guidance on governance issues

Peter has the expertise to lead you through this often-complex process. The market has developed a global set of governance practices designed to align the interests of the management team and the fund’s investors. Examples include an advisory committee composed solely of investors, an investment committee with no investors, and a variety of compliance and reporting practices.

Conflicts of interest can be common, and market practice has evolved a set of formal and informal structures and procedures to deal with these issues at both the fund and the investee levels. Peter can provide the necessary guidance on various mechanisms to address potential conflicts within the legal structure of the proposed fund.

Business model and fund terms development

Working with team members, Peter can help create financial models for both the fund and the fund manager. Based on these models, he can also help identify underlying assumptions that can affect the design of the fund, such as constraints on the size, type and number of investments, geographic coverage and team location, as well as the desired team composition, skill sets and compensation.

One important result of the model will be the development of a list of key terms for the fund, such as target fund size, range of investment size, type of desired portfolio company, instrument types, fees and legal structure. This term sheet can then become the core of discussions with potential investors, allowing the manager to focus discussions with investors around the most important issues.

Guidance on fund structures

The typical private equity fund is structured as a limited partnership, though it is not the only acceptable form. As a general rule, the goal for a first time fund should be to present potential investors with a plain vanilla structure, to encourage investors to focus on the substance of the fund’s investment operations rather than on creative structuring that requires significant additional analysis. 

Peter has significant experience reviewing fund structure, and can meet with local counsel, if appropriate, and recommend adjustments, if needed.

Investment process review and recommendations

Funds need to have a formal investment process in place, including clear decision points, assigned responsibilities and related documentation.

This process involves distinct stages such as building and filtering a strong pipeline, conducting due diligence, valuing potential investments and structuring deals, managing portfolio investments and adding value, and driving exits.

Peter can review the existing process and make recommendations for improvements as needed.

Risk managment review

Most institutional investors want to see that a fund has the embedded culture to analyze and mitigate the risks of each potential investment related to policy areas such as environment and corruption, along with the internal policies and procedures to handle any issues that arise after an investment is made.

Peter can provide a review of these existing policies and procedures and make recommendations where there are gaps.

Investor relations needs assessment

Peter is highly skilled at facilitating a discussion of what institutional investors expect from a fund in each of the areas described above, including the reports they require and the ongoing informal relationships they seek. He can also review the fund’s back office operations and investor reporting in the light of best international practices. Peter does not provide fundraising advice or participate in fund raising activities.