Successful Succession Planning. Thinking About Tomorrow Today

As the private equity industry has grown and matured, one of the key issues facing fund managers and limited partners alike is the matter of succession planning by fund managers. For fund managers, succession planning helps to ensure a smooth transition from one generation of managers to the next and, ultimately, the continued existence and growth of the private equity firm that they have devoted much of their lives to building. For limited partners, succession planning by a fund group is important because an investment in a private equity fund represents a long-term commitment. Limited partners want to be sure that the private equity firm can attract and retain the best managers, that the fund managers who are actively involved with the fund’s portfolio have sufficient economic incentive to make the fund successful, and that any changes in fund management will be accomplished smoothly.