KY Tang: This time it's different

10. For the first time in 10 years, it is better to be a private equity fund with 10-year money than a hedge fund with quarterly redemptions.

9. This time, GPs and LPs are running to their lawyers to ask: “How does this ‘No-fault termination’ clause work?”

8. GPs now understand why due diligence should not be done in less than two weeks and encompass only one management meeting.

7. This time, GPs have chutzpah! They dare to tell their LPs: This fund will never pay out a carry. We do not want to lose such a talented team. Therefore, Mr LP, it is in your interest to amend the waterfall distribution structure to start paying carry when the cash return reaches 0.5x cost.

6. This time, LPs have chutzpah! They dare to publish a report with 74 recommendations on how fund terms and conditions should be structured.

5. This time, sellers of businesses have chutzpah! Ten years ago, at a time of financial distress, they sold businesses for 4x EBITDA. At this time of great financial distress, they won’t sell businesses for less than 8x EBITDA.

4. Private equity firms have discovered that loan covenants are real.

3. A new standard has emerged in Asia for valuing private equity portfolios: It’s called “Higher of Cost or DCF”.

2. Last time, we invested 25 percent as equity and borrowed 75 percent.
    Now, we borrow 25 percent and invest 75 percent as equity.

1. Last time: Capitalism saved China.
    This time: China saved Capitalism.