For much of the past decade, strong fundraising, rising asset values and readily available liquidity helped contain tensions that might otherwise have developed into disputes. Where performance remained strong and exits could be achieved, disagreements between fund managers1 and investors could often be resolved commercially.
The environment has become more difficult. Longer holding periods, fewer exits, valuation uncertainty and greater investor scrutiny are putting pressure on relationships across private markets. In our experience, this is not only leading to more disputes but also changing the issues around which they develop.
Fund disputes rarely start with a formal claim. More often, ordinary features of the relationship gradually become contentious. A capital call is questioned. An investor asks for the documents behind an explanation. Concerns over valuation develop into concerns over liquidity. Governance procedures which previously attracted little attention are examined
