Uncertainly is a killer (Editor's letter)

This article originally appeared in the December 2009 Private Equity Manager Monthly, a monthly printer-friendly publication delivered to subscribers to Private Equity Manager.

We all know that fear of a looming, unpleasant event can actually be more stressful than the unpleasant event itself. For example, the stress caused by thinking about how you need to tell your boss a piece of bad news the moment he returns from a ski vacation is likely to be more damaging than the actual fallout from this communication. Stress is a killer, and therefore the stress of uncertainty is a killer.

Over the past few months, Private Equity Manager has used the terms “looming”, “pending” and “proposed” quite a bit in describing plans for new regulatory regimes that may or may note come to pass in their current forms. In the meantime, those charged with managing private equity firms are finding it hard to plan for the future.

Take for example our interview with professionals Paul Capital on the firm’s approach to living with regulations around the world. Whatever final form the EU’s Directive on Alternative Investment Fund Managers takes, keeping up with the “moving pieces” of this pending regime is a full-time job, according to Paul Capital’s chief compliance officer Carroll Archibald. 

Similarly, the unnamed placement agent we interview on attempts to tackle a thorny issue – how do you structure a placement assignment with a GP when the rules for placement agents in the US might change halfway through the fundraising? If your agent raises $100 million for you from US public pensions, and then an SEC ban is enacted preventing this sort of intermediary activity, can you legally pay your agent? It’s an unknown, but it better to ponder the range of outcomes now than later. 

We hope you’ll find Private Equity Manager will give you good ideas and tools to use as you plan for one of several future routes your firm might take.

Enjoy your PEM Monthly,