A good private equity GP wouldn't dream of doing a deal without first traveling to the company in question, meeting all the senior executives, strolling the ?factory floor,? speaking with customers and suppliers and kicking the hell out of the proverbial tires.
And yet, for years some limited partners have complained that their GPs do everything they can to avoid having their own tires kicked, so to speak. Until recently, the attitude of too many busy GPs has been, ?I'll contact you for capital calls and distributions, and I'll see you the next time we raise a fund.?
At annual meetings, some LPs have complained that GPs are not exactly loquacious in their presentation of information. As you'll read in Judy Kuan's feature on annual investor meetings (p. 18), some GPs have been accused of everything from spouting out numbers faster than investors can write them down to not including the names of people's organizations on name badges, which has the effect of preventing LPs from identifying one another and (horror) talking amongst themselves.
In this post-Enron era, LPs have a rather sobering complaint too much entertainment, too little education. Instead of investing $50,000 to have a washed-up comedian regale the crowd at your next annual investor meeting, say LPs, spend 50 man hours putting together a pithy presentation on the state of the portfolio companies and the state of the markets and economies in which they do business. LPs want to go home with more knowledge, not more ?schwag.?
In fact, LPs are increasingly traveling to exotic locales to perform due diligence, chiefly to the offices of private equity firms. Starting on p. 26, Andy Thomson presents ideas for how to prepare for onsite visits. Be aware that LPs are eager to speak to your junior professionals, who may not necessarily praise you behind closed doors.
As anyone who has ever been a principal in a wedding ceremony knows, event planning is difficult, and a real test of a person's ability to marshal resources, create a valuable experience, and leave attendees feeling uplifted. Increasingly, general partners must play this role for their LPs, and their success or failure will be deemed reflection of their abilities to bring a similar sort of magic to portfolio companies.
Enjoy the issue,