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Private Equity Succession Planning Do’s and Don’ts

Submitted by Michelle Young at Toptal

Authored by Melissa Lin, Finance Editor at Toptal

Edited by Lynn Patra

Executive Summary

Private Equity Succession Planning: Portfolio Companies
Don’ts in Private Equity Succession Planning for Portfolio Companies
Do’s in Private Equity Succession Planning for Portfolio Companies
Succession Planning for Private Equity Firms Themselves

Introduction

While growing investor enthusiasm has contributed to a flood of capital (a historic $3 trillion over the last five years), the private equity industry faces increasing competition among PE firms, record-high multiples, and other factors making it difficult for them to generate attractive returns. One aspect for consideration is succession planning, especially since CEO turnover at portfolio companies occurs at a rate of 73% and has been shown to increase hold time and decrease returns. While succession planning is undoubtedly important for the continuity and sustainability of any company, it may be even more true for those in the private equity industry.

This article defines succession planning and examines the best practices and mistakes to avoid in succession planning for PE portfolio companies (beyond just the CEO level). It also explores succession planning within private equity firms themselves, something PE firms have been uncharacteristically proactive about confronting recently.

What Is Succession Planning for Private Equity Portfolio Companies?

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Considerations for Raising Your Own Private Equity Fund

Submitted by Michelle Young at Toptal

Authored by Martin Kemeny, Finance Expert for Toptal

Edited by Lynn Patra

Executive Summary

Raising a private equity fund is a natural progression for ambitious investment managers.
The strategy and operations of a fund should be thoroughly planned in advance.
Be well aware in advance of the securities laws that must be adhered to.

There’s a time in many investment managers’ careers when the next logical step is starting a private investment fund on their own. Either the manager has been working for others as an employee and now wants to go solo, has been investing their own money and wants to raise outside capital, or has been investing with others’ capital on a one-off basis and wants to scale. Whatever the reason, in many cases, the right answer is to set up a fund. A fund can stabilize an investment business and help the manager grow assets under management and create a valuable investment platform.

Whether co-mingled or from a single investor, a fund has many distinct advantages over one-off capital raising: Read more of this post

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