Joe Milam

📈🏢 Aby Rosen's RFR Holding is facing a staggering $2.5B debt bill as defaults pile up! 💥 🔎 According to a recent Bisnow article, RFR Holding, a prominent NYC real estate firm, is grappling with mounting debt and defaults. The company, led by billionaire Aby Rosen, has a portfolio of high-profile properties, including the iconic Seagram Building and Lever House. 🏢🏦 📊 The firm's debt load has surged to a whopping $2.5B, with $1.1B in loans maturing this year alone. 💸 The pandemic has hit the commercial real estate market hard, causing defaults to skyrocket. RFR Holding is no exception, with defaults on several properties, including the $200M mortgage on the Seagram Building. 📉 🗣️ "The pandemic has created a perfect storm for commercial real estate," said one industry expert. "Companies like RFR Holding are facing unprecedented challenges as they navigate this difficult time." 🌪️ 🔜 So, what's next for RFR Holding? The company is reportedly exploring options to refinance its debt and avoid further defaults. 💡 With the commercial real estate market showing signs of recovery, there's hope that RFR Holding can weather this storm. 🌞 Stay tuned for more updates on this developing story! 📰🔔 #RFRHolding #CommercialRealEstate #Debt #Defaults #NYCRealEstate

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New or smaller VC, PE or HF manager? AUM less than $50 million? Great Performance? Trying to raise assets? Struggling and failing?   Sounds all too familiar: It’s due to poor or non-existent marketing Let’s get real about raising assets for “sub-institutional” managers, those with AUM between $0 and $50 million. IT’S HARD AND A STRUGGLE.   Raising assets in a crowded, hyper-competitive, complex and complicated market from investors that are risk averse, stringently selective and idiosyncratically demanding is more challenging and difficult than most new and sub-institutional managers understand. The fact is the majority of sub-institutional managers fail to get AUM beyond personal capital long with small amounts from family and friends even when they have exceptional performance. Plainly speaking: There is a lot of BS, hype, propaganda and completely wrong information about marketing and fundraising for small managers with AUM less than $50 million Since 2011, Johnson & Company has specialized in meeting the marketing challenges for "sub-institutional" managers. 25+ years experience, expertise and skill uniquely equips a new or smaller manager with the FACTS and proven structured, disciplined and focused PROCESS supported by independent high-integrity data and research, accurate information, objective insight, expert instruction and frontline intelligence that optimizes marketing process execution to maximize the success, efficiency, economy, expedience and effectiveness of raising assets. If you’re a new or smaller manager, with AUM less than $50 million struggling and failing to raise assets, first get the facts: https://johnsn.com/facts If after your review of the “FACTS”, you’d like a candid, no-nonsense conversation about marketing and raising assets, contact me, I welcome the opportunity. [email protected]

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Private credit isn't just about yields; it’s about balance. RIAs are the new kids on the block as investors, but they're the next frontier. As RIAs enter the credit market, they face a dynamic landscape with opportunities and misconceptions. Understanding the current landscape assists RIAs in making informed decisions, and embracing complexities that lead to better client outcomes. Had a great chat with Joseph Weissglass and Jordan Selleck on the 51 Labs podcast, Investors and Operators, diving into the role of RIAs in the private credit space. Full episode linked in the comments below! #privateequity #mergersacquisitionsdivestitures #investorsandoperators

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I occasionally like to scan through the PE subreddit to keep a pulse on what early career fund managers and others looking to break into the industry are talking about. Recently, I found a question asking if it’s possible to achieve a healthy work/life balance and realized I haven’t said a lot here on the topic. In private equity, the demands are high, especially for those starting out. That means long hours, weekend work, and constant travel are common—making burnout seemingly inevitable. However, here are some ways that I’ve been able to keep that burnout at arm’s length over the years: - Establish clear work hours and communicate with your team to ensure mutual respect for personal time. - Prioritize high-impact activities and delegate when you can. - Remember to take care of your physical and mental health. Regular exercise, a balanced diet, and adequate sleep are non-negotiable. Personally, I favor ice or street hockey to stay fit. - Make time for family and friends to maintain a support system. Nurturing these relationships provides emotional support and helps maintain a sense of normalcy outside of work. - Find ways to give back—you would be amazed at how great it feels to help others who may not have the same options or opportunities you do. Through the Frank Family Foundation, I established as a teen entrepreneur, my mom and I work together to determine which nonprofit organizations to support. We take the time to meet with those in need so we can understand how best we can help. Remember, your career is a marathon, not a sprint. You’ve got to find a way to work toward your goals while maintaining a fulfilling personal life if you want to outlast your competition. https://lnkd.in/db4EJh9k

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My latest Substack post analyzes $XOM once again catching $TSLA in terms of market cap. Last 5 qtrs: $XOM returned ~$40bb to shareholders via divvies, buybacks. $TSLA: $0.00 That is what really matters. But the key to investing is the second derivative, and as EV sales slow (good for demand for oil, obvs, and for $XOM) I fail to see the Silver Bullet for $TSLA. Why? Because Elon let his product line get old. No amount of robotaxi/FSD necromancy is going to change that. Trade accordingly. Excelsior! --Jim

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The Times They Are A Changin’ The three pillars of Private Credit have evolved from 1) Middle Market Lending, 2) Lower Middle Market Lending and 3) Upper Middle Market Lending to a broader, larger TAM that is worthy of consideration. Capital allocators have greater flexibility with a strong potential for enhanced returns by optimizing and diversifying their portfolio of Private Credit holdings. Key to select upper-quartile, experienced managers, however the approach to strategy that has prevailed during the past 10 years, may not be optimal in the years to come. Looking forward, Private Credit will be defined differently. Direct Lending will continue to receive allocations, however Asset-Based Lending will begin to take a larger share of the growing pie. ABL is huge, the TAM is measured in tens-of-trillions and I believe will grow to be as large as Direct Lending in 10-years’ time. Marathon Asset Management has been actively running its ABL strategy for the over 15 years and as an incumbent and experienced ABL manager we see firsthand how this market is developing. Basel III-Endgame will advance the development of Private Credit ABL just as Basel III enabled private credit managers to capture market share for Direct Lending over the past 15 years since the GFC. As the global economy grows, both Direct Lending and ABL will benefit as they form the 2 key pillars of the Private Credit market. The 3rd leg of the Private Credit stool are Opportunistic Strategies, defined as Capital Solutions, Dislocation & Distressed. Capital Solutions are a critical component to lending allowing for both growth capital as well as bridge capital during times of stress or transition for a company. Capital solutions may require a turn of extra leverage, carrying significantly higher coupons (~200bp+), +warrants supported by super-strong covenant package that can provide the lender with higher IRRs and MOICs.. Given current market conditions, capital solutions are a key component for any opportunistic lending program. As companies go all out to avoid BK, distressed exchanges have added to the opportunity set, as new money solutions enable companies to exploit weak documentation within credit agreements lenders previously accepted. Today, Opportunistic Credit is robust and I see as many opportunities in Capital Solutions as I do in special situations and dislocation. The right combo for a Private Credit portfolio might be 40% Direct Lending, 40% Asset-Based Lending & 20% Opportunistic Credit. Private Credit performance is remarkably consistent with lower volatility relative to most alternative assets. Porfolio Construction is always top of mind for me - how would you build your Private Credit portfolio? What strategies, which managers, how big of an allocation across a balance book that includes Public Debt, Public Equities and Alternatives? Private Credit in aggregate is approaching $5T across various strategies. I believe it will 3x ($15T) in 10-years.

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As we touched on in "Organize Your Investments: A Guide to Structuring Your Portfolio for Long-Term Success," when you sell an investment for more than you paid for it, there can be burdensome capital gain taxes realized in the year of the sale. How do you manage for this challenge? It helps to identify which trades can be placed promptly, and which may be better managed over time. Read today’s blog where we explore. https://buff.ly/4awzaqM #financialplanning #taxes

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As we touched on in "Organize Your Investments: A Guide to Structuring Your Portfolio for Long-Term Success," when you sell an investment for more than you paid for it, there can be burdensome capital gain taxes realized in the year of the sale. How do you manage for this challenge? It helps to identify which trades can be placed promptly, and which may be better managed over time. Read today’s blog where we explore. https://buff.ly/4awzaqM #financialplanning #taxes

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Raising Assets: THE critical objective for new & smaller VC, PE & HF managers. Most struggle and fail despite "performance"+ an exceptional track record. WHY? = MARKETING.   There are thousands of venture, private equity and hedge funds in active fundraising + investors are risk-averse, highly skeptical, stringently selective and uniquely demanding.   New and smaller managers must be completely prepared for marketing in a hyper-competitive, crowded and complex fundraising climate.    Success raising assets depends on the marketing process.   However, "81% of smaller managers do not have a marketing process".   The requirements of marketing are misunderstood and under-estimated by almost all new and smaller managers.   1. The marketing process for "sub-institutional" managers is completely different than for larger, "more-seasoned" "institutional" funds.   2. “Pitching”, “Posting”, “Parties (conferences)” & "Performance" don’t raise assets for new and smaller managers.   3. There's a lot of BS, scams and wrong information about raising assets for new and smaller managers.   Since 2011, Johnson & Company has specialized in marketing for new and smaller managers with AUM less than $50 million.   “MARKETING ALPHA BRIEFINGS”: A “1-on-1 intensive process” for managers with AUM considerably less than $50 million to implement the structured, disciplined and focused “manager-specific marketing process" that drives consistent “step-by-step” “high-impact” "investor-centric/prospect-specific” engagement with experienced assisted execution, expert guidance and the personal instruction that raises assets efficiently, economically & expediently.   Key Briefing Process Components:   ✅ 12 weeks 1-on-1 Marketing/Fundraising Sessions. ✅ 7 day/week "On-Call" Marketing/Fundraising Guidance. ✅ "Step-By-Step" Assisted Marketing/Fundraising Execution.   On-Site "Briefing Topics":   1. The “6-Steps” of the Allocation Pathway. 2. DON'T "PITCH"="PRESENT!" = Know the CLIMATE.Understand CONTEXT. 3. Prospect Engagement: "INVESTOR-CENTRIC" + "PROSPECT-SPECIFIC". 4. Building The "Pipeline": What's YOUR Profile? 5. Avoiding the "Field of Dreams": "If YOU build it; THEY won't come!" 6. 3rd Party Marketing: Placement Agents - The mystery for smaller managers. 7. 4Q Profiling: Organically build relationships to raise assets. 8. Databases and Platforms: "Post & Hope"!? 9. ODD-Ready! Your Operational Blueprint. 10. Collateral/Content/Conversations: One size doesn't fit all! 11. EQ>IQ: Connect to Build Trusted Relationships & Actionable Conviction. 12. CON'D?! "CON"ferences stop wasting your time and $$$! 13. De-CAPitated!: Working with prime broker cap intro. 14. Consultants & Gatekeepers: Allies? Advocates? Adversaries? 15. Family Offices: Getting The Trusted Introduction. 16. Seeding, Incubators & First-Loss Capital: Real? Hype?! 17. LIGHTS! CAMERA! ASSETS?!: Using social media. 18. NO FREE LUNCH: Take $$ to raise assets.   FOR DETAILS: https://lnkd.in/gRetGVzA

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This FT article has a fancy graphic illustrating the layers of debt in private equity, but -- despite my prior post warning about the risks of debt layering in PE -- this article is inaccurate scaremongering. Here’s the key line: “Much of this lending is ultimately underpinned by the financial health of a fund’s portfolio companies. Yet every transaction ends up adding more leverage to heavily indebted businesses, which can make them more vulnerable in a downturn.” This statement is fundamentally incorrect. From the leverage used by General Partners or Limited Partners on their overall private equity portfolios to the use of subscription lines, secondary fund leverage, and leverage by funds purchasing GP stakes—none of these add leverage to the individual businesses or increase their susceptibility to economic downturns. The only mechanism that does add leverage to a business is a dividend recapitalization. However, the alternative is typically the PE firm selling the business to realize its investment, where the acquirer, especially if it’s another PE firm, would likely employ the same amount of leverage. Net Asset Value (NAV) loans may represent leverage on leverage from an LP’s perspective, but they do not increase the portfolio company’s debt or its bankruptcy risk during a downturn. Instead, they merely increase the possibility that the GP might need to sell sooner than desired to repay fund-level debt. Therefore, the only factor impacting a portfolio company’s failure probability is dividend recapitalization. The bank’s expertise is to assess the risk of its debt investment in the company. Whether a GP sells a stake in their management company, an LP sells a stake to a secondary fund, or the fund uses a subscription loan (a short-term loan backed by LP capital commitments to optimize investment IRR by delaying capital calls) to purchase the company—none of these scenarios affect the portfolio company’s ability to weather a downturn. “There should not be a pocket of the market that touches on so much of the economy in such a sizeable way, where we can say, ‘oh there’s leverage,’ and then very few of us can explain what that leverage means and why it might—or might not—be risky,” said Victoria Ivashina, a professor at Harvard Business School specializing in private capital. I can only assume Professor Victoria Ivashina was either unaware of the article’s specifics or, as a private markets expert, she is 'one of a few' (?) who could have alleviated the author’s concerns about this ‘web of debt.’ Moreover, where is the causality here? There is no indication (other than the title of the article) that PE firms are coercing banks into making these loans. The title could just as easily have been “How Banks Have Mired PE Shops in Potentially Depression-Inducing Debt.” Both parties willingly engage in these transactions, and as new debt products emerge, banks are as proactive in marketing them to PE firms as the firms are in seeking them out.

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Out of complete necessity, I will host another CollinsCast 10/23 at 5pm ET to discuss $TSLA EPS before the mgmt call begins at 5:30pm. Video call link: https://lnkd.in/eEErpw_7 Or dial: ‪(US) +1 402-732-7305‬ PIN: ‪403 326 826‬# I have never seen a more confused bunch of "analysts." $TSLA is going to market with a 7.25 year-old (3) and 4.5 year-old (Y) product lineup. Old product requires discounting, and that pressures profit margins. Full stop. That is why $TSLA earnings have been consistently mediocre and margin pressure at what was proclaimed by nitwits--as recently as 12 months ago--as "the most profitable automaker in the world" is incessant. As shown in the chart below, $TSLA has LOST $550 BILLION in market cap in the past 2.75 years, which is an extraordinary diminution in value. And if you compare RELATIVE performance vs., for instance, $NVDA, or even $AAPL, which pays a dividend (something TSLA has never done,) $TSLA stock has been an absolute disaster since the beginning of 2022. But Wall Street hides that. Tomorrow, I will explain why. Join the CollinsCast.

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How does a brand distinguish itself in an increasingly crowded market? This question was thoughtfully explored in a recent podcast featuring Eric Bandholz, founder of Beardbrand. He emphasizes that success isn't merely about revenue; it's about forging authentic connections with your customers. Bandholz champions storytelling as a vital tool for independent brands, allowing them to resonate deeply with their audience—something big retailers often overlook. Moreover, he shares insights from his journey, highlighting the balance between business growth and maintaining personal freedom. Both ambition and values shape a company's path—harnessing authentic experiences rather than succumbing to growth for growth's sake. Given the current economic climate, understanding these concepts becomes even more crucial for entrepreneurs and investors alike. As we navigate through opportunities and challenges, reflecting on the cultural aspects of business can provide a vital edge. What strategies have you implemented in your business to connect with your audience on a deeper level? #Entrepreneurship #BrandStrategy #CustomerEngagement #Storytelling #FinancialConsulting #Beardbrand https://lnkd.in/gVTF6-_X

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LP Tip #20 out of #50: To re-up or not to re-up A re-up refers to an LP making an additional investment in a fund where they previously invested. Before we dive in I want to share that there are reasons an LP may not to re-up which are not in your control. Here is a short list: ➡️ The LP may have evolved their strategy and needs to scale back the #️⃣ of funds they invested in.   ➡️ The LP was never set up to re-up in the first place. ➡️ The LP could be an individual that found themselves in a cash crunch and overly exposed to venture.  I'm assuming that when you got your investment that the LP explicitly told you they do re-ups. Please do not assume they do. My expectation is also that the LP dug in to properly underwrite the fund. 🏴 Re-ups are not automatic. An LP will have to re-underwrite each fund. The speed of the re-up also depends on how much work was done in the initial investment, who led the investment, level of confidence there existed when that investment was done, and current pipeline of funds. There are 4 flags that may cause an LP to walk away. 1️⃣ Partner Breakups/Changes and Team Turnover:  The biggest risk in Partnerships are whether the Partners will stay together. One LP gave me a framework on how to think through this issue that has stuck with me. Partnership is like a marriage. If one feels there is potential for a breakup, does one believe it will be an amicable breakup? Or, does one believe the spouses will never talk again? If it is an amicable split that is manageable. The Partners can find a way to support the fund. Then the question becomes whether the LP wants to back the Partner/s that remain.  If there is high team turnover. The LP will want to investigate because team stability is used as a proxy for firm sustainability and ability to scale. 2️⃣ Fund Does not Execute on what they Sold the LP:  The LP “bought” something specific and typically it is because they were missing this strategy or wanted exposure to a strategy for the portfolio they were constructing. An institutional LP will invest and write a detailed investment memo flagging all the things you said you were going to do and then go back and compare when you come back to ask for money. If for example you pitched a generalist seed stage fund and you show up asking for money sharing that you invested in deeptech at A that will cause alarm. The same can be said for the number of companies you promised to invest in or check sizes you wrote. If there are big differences LPs will want to know why. 3️⃣ Bad Actions  The fund manager/s does something that is unethical. This is a no go for an LP.  What if the situation is not clearcut? This is different for everyone and requires discussions b/w GP and LP, but most LPs don't want headline risk. 4️⃣ Continuous Underperformance  If it's early days an LP will look at some key indicators to see how you are progressing over time.

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Why Buying Your First Business is the hardest & Financing The Fear is Being seen as too risky by lenders and investors. The Solution: Prepare a solid business plan with detailed financial projections. Work with a financial advisor to enhance your credibility. Consider alternative financing options like SBA loans or seller financing.

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Happy Thanksgiving! Love this perspective on fund diversity and deployment strategy. "For early stage investing, large portfolios (~100 investments) outperform small portfolios (~30 investments). The goal for pre-seed or seed GPs is to invest in a large enough number of companies to maximise the chance of finding outliers (about 2% for ~50x, 5% for ~15x according to data from Dave McClure). From that point, once you have built a sufficiently diversified portfolio, you can consider a strategy to deploy remaining funds into follow-on rounds for best looking companies as "call options". This only makes sense if you think these follow-ons are the best opportunity available for that capital. Evaluate them as you would any other investment. A lot of VCs (and LPs, for that matter) understand the logic of concentrating into winners, but not the first step of building an appropriately sized portfolio. Why? Probably because the former amplifies risk, while the latter reduces it — playing into the principal-agent problem in VC and the "power law" smokescreen. It also happens to be a lot easier to manage a small portfolio. I've spoken to LPs that say they prefer small portfolio strategies because concentrating into winners is more likely to produce >10x returns. In a world where only the top 5% return >3x, it makes ZERO sense to optimise for that level of risk. Especially when you are allocating other people's capital (pension funds, MFOs, sovereigns, etc). "Few investors demand diversified funds, so GPs don’t offer them. A slow and steady 'venture is a numbers game' pitch is much less emotionally compelling than 'I am a rock star who can consistently beat the odds.' And GPs need an emotionally appealing pitch to get funded." - The Pervasive, Head-Scratching, Risk-Exploding Problem With Venture Capital" This is how we built our fund's strategy -- to invest early in a diverse portfolio. Our current partially deployed fund already has 42 bets, averaging a deal every 1.8 weeks. Dave McClure taught us that investing in 50 companies on a 10x lower cost basis leads to close to the same ownership in each one as investing the same capital in just 5 companies. This approach seems advantageous for startups too as it allows us to give an easier yes to diverse and early companies. We are still finding our sweet spot around valuations and portfolio construction, and we are passionate about these core principles. Jamie Rhode, CFA has done many podcasts on this for those who want to hear more about the data. I look forward to fund 2 when we will have enough capital to both make diverse bets (60+) as well as have follow-on capacity for winners when they are, as Dan says, the best available opportunity for that capital. For investors and startups, what do you think about this strategy? https://lnkd.in/gizefUYC Benjamin Rolnik Julia C. Manu Satyavolu Aman Verjee, CFA Sophia Platt

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The Four Seasons in New Orleans is in default. Senior lender is reported to be asking developers to seek an equity capital injection or sell. It is reported that the developer is seeking additional capital, and is looking to renegotiate the loan. Other details: - The $564mm project was developed from 2018-2021. - The luxury condos are currently being marketed for ~$1,500 psf with price ranges between $7-10mm - The project is the redevelopment of the former NoLa World Trade Center -The project sought to improve the riverfront and attract capital to the city in the decade after Katrina - It appears that the project is on a ground-lease - It appears that EB-5 capital was also involved with financing the project - 33 condo units remain unsold - representing approximately half of the residential space; Asking prices are more than double the market average Source: Nola

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The importance of patience and a long-term mindset, as well as understanding that at an institutional level, money managers are factorized into a portfolio and not an all-in-one strategy, is important. Thanks for sharing this research from Baird, Laurent Millet. Great read!

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The success of a Fund boils down to DPI (distributions back to LPs in relation to how much capital was deployed). The industry often gets infatuated with TVPI, which accounts for paper gains. However, these numbers are frequently not worth the paper they are printed on. Knowing when to stick or twist is always a challenge, so I favor a balanced approach: the third-third-third strategy. Sell a third of the investment at the first opportunity. Gradually sell the second third. Hold onto the final third for potential upside. Even this model needs adjustments based on market conditions, requiring a mix of aggressive selling or patience. The real issue for LPs is the industry's recent obsession with maximizing TVPI without enough attention to DPI. This can lead to portfolio imbalances and potentially disappointing (or zero) cash returns. 🎙 Listen to my full episode of Fintech Leaders with good friend Miguel Armaza for more on data as the new gold, secrets behind successful VCs, and the importance of founder-market fit: Spotify: https://spoti.fi/3KitB4b Apple: https://apple.co/4bXmmuC Youtube: https://bit.ly/3Vh4HIz

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Insightful article on the PE secondary market and explosion of '40 Act funds I mentioned last week. A couple of highlights jumped out to me: 1. Listed Funds Pricing Regular Way Secondaries at 10-12% Expected Returns!! Baird Capital analysis claims '40 Act funds are underwriting transactions to 10-12% returns, and Evercore reports '40 Act funds are outbidding secondary buyers by 6 percentage points (so those numbers seem to tie out). This deserves a deeper dive -- but here are off-the-cuff observations. The secondary market has exploded, with one of the primary use cases being an excellent way for new or growing allocations to private equity to start generating PE returns quickly and bypass the j-curve. But I'm guessing the 'PE returns' hoped for is not 10-12%. I also think most investors don't internalize how duration sensitive the secondary pricing models are. Portfolios priced to a 10-12% return with liquidity expectations that are off by even two quarters will severely underperform. If buyers use debt to enhance returns on the secondary portfolios, the degradation in returns due to delayed liquidity will be that much more amplified. 2. GP-Led Transactions are Magical Fairy Dust According to Baird (which is understandably talking their book), GP-led transactions are magical transactions where all parties being made better off. I respectfully disagree with the blanket assertion. These transactions provide a liquidity option (which, we should note, the LP was already promised) and the ability to generate additional returns, but they may not always align the interests of limited partners (LPs) and general partners (GPs). It’s crucial to evaluate each deal on its merits to ensure that the terms don't disadvantage the LP's, as they easily can (and have). Future Topics to Explore: 1. What Business Are PE Secondary Buyers In? 2. Secondary Pricing Basics – What Are the Key Assumptions/Sensitivities? 3. 40 Act Funds – Finally a PE Vehicle That Makes Sense for HNW Investors? #PrivateEquity #SecondaryMarket #InvestmentStrategies #40ActFunds #GPLEdTransactions #DurationRisk #Leverage #MarketInsights #HNWInvesting #Finance #WealthManagementhttps://lnkd.in/gMtwZDFF

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