The ground is shifting under private equity (PE) firms. Strong fundraising in vintage years combined with slower deal flow has led to PE firms holding onto more and more capital, with few true value-creating opportunities available in developed industries and markets. Combine those facts with ongoing economic uncertainty, the low cost of borrowing, and larger funds increasingly seeking out opportunities in the middle market, and it all adds up to escalating competition and ever higher deal multiples for PE players.

It’s not surprising, then, that many traditional private equity...

Because of the typical three- to five-year holding period of private equity firms’ ownership in portfolio companies, PE firms are typically highly experienced in the acquisition and disposition of companies and the nuances of dealmaking. 

In the current environment, where access to capital is abundant due to historically low interest rates, there continues to be significant competition among private equity firms for high-performing portfolio companies. As the demand and competition for suitable portfolio assets has increased, valuations and purchase prices have followed course,...

Private equity firms routinely appoint directors to boards of their privately held portfolio companies and other investment vehicles, some of which will eventually face financial distress. Often, a person appointed to a board by a private equity firm has a relationship with the firm (e.g., they work there or are a trusted friend) but limited experience when it comes to what to do under troubled circumstances. Such individuals may worry about their personal liability in such a situation. What should such an individual do?

The first thing is to make sure that the board is...

Portfolio companies sometimes fail. This obviously isn’t breaking news, as master funds routinely divest themselves of investments. Sometimes the investment never worked out, or the portfolio may have simply run the course of its natural shelf life. Whatever the impetus may be, it’s important to understand that there are many ways effectively to wind down and dissolve a portfolio company. 

Choosing the dissolution method most advantageous for the dissolving company and the master fund requires consideration of several factors. Certainty of process and cost, and minimizing exposure...