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ARTICLE · 20 MAY 2015

Five Issues That Are Critical To LPs

The longevity of the firm and how the firm's team has worked together. LPs do not like a revolving door at the PE firm and want to know that they have worked together consistently and cohesively for many years.

United StatesCorporate/Commercial Law
  1. The longevity of the firm and how the firm's team has worked together. LPs do not like a revolving door at the PE firm and want to know that they have worked together consistently and cohesively for many years; even if with a new fund, often the principals will have worked with each other at a prior fund and had success.
  2. LPs dissect how acquisitions are made – meaning that they do not want to hear that a PE firm purchased six different platform companies in frenzied large auctions (unless they had a great angle on the industry). LPs want to see that PE firms have a business development partner – pretty much full time – and that the firm uses buyside investment bankers, uses senior operators who are well networked into a certain industry, frequent smaller investment banks that are focused in the PE firm's industries and perhaps partner with a CEO who will have a great network and bring opportunities to the table as long as he or she has a sound thesis. So, LPs

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