The Future of Private Equity Private Placement Memorandums
The Financial Times has a great story up about transitions and the passing of the torch in the private equity industry. We here at Private Placement (PPM) do much business that touches the private equity field as a source of raising private placement capital. At PPM we learn from PE financiers all the time. We have heard time and again that the private placement memorandums (PPM) we produce are sophisticated and professional enough to suit the needs of PE investors. Private equity professionals often structure deals in an innovative manner, and our PPMs have always been up to the task of defining the capital structure, operating structure, risks, and legalities these professionals need when doing deals.
The article points out that private equity funds are unusually long lived assets. PE funds are quite pricey investment vehicles due to high fees—but of course offer a terrific return in many cases. Individual fund managers are under increasing pressure to perform, especially at firms where a few veteran dealmakers (often the founders) are responsible for starting multiple funds.
Legendary managers are getting on toward retirement and thinking about succession planning and their pipelines about. Consider private placement geniuses like Stephen Schwarzman who built Blackstone (now 68), Henry Kravis of KKR (71), David Rubenstein of Carlyle (65), and Hank Greenberg and Sumner Redstone. The individuals have closed thousands of deals among them throughout their illustrious careers, and there was likely an offering memorandum (OM) underpinning each deal.
The private equity business is built on a savvy understanding of the businesses being invested in. Funds vet businesses for their potential, the promise of their management teams, and the risk embedded in the investment. All these aspects are disclosed in private placement memorandums, offering memorandums, and other private placement documents such as those we produce here at PPM.
What’s next for private equity? There are ever increasing methods for raising capital—from private placements of all varieties to crowdfunding to IPOs and many more. We here at PPM are excited for what the future will bring, even as we have built our success providing top quality documents that fit the model PE icons like Schwarzman and Redstone originated. We are ready to adapt the private placement memorandum (PPM) and OM for a new age that suits our clients ever evolving needs.