Succession and coming through the cycle

Surviving the downturn: Our April cover story tackles an often sensitive, always difficult issue. It has some heightened relevance as we head into a new phase of the economic cycle, when a tiering of managers is almost certain to evolve among the record-high number of managers in the industry. The art of succession planning is as much about attracting, retaining and cultivating talent throughout the firm as it is about avoiding the immediate disruption that can ensue when a founding partner needs replacing. And as multiple experts opine in the piece, the chiefs of finance are uniquely placed to help balance the tricky act of succession planning. We also take a look at some of the different, complex financial mechanics used to successfully tackle this difficult issue, and ask CFOs how they view retention and compensation within their teams, and the firm as a whole.

Stake sales: GPs are using profits gained from stake sales into themselves to capitalize on coronavirus related market dislocation, Private Equity International’s Alex Lynn writes. Dyal Capital Partners has been receiving an uptick in calls from managers hoping to seed sidecar vehicles targeting distressed loans, both for equity and long-term debt financing at the firm level. But closing new investments may be trickier than usual as uncertainty surrounding portfolio company valuations continues.

CARES: Securities and Exchange Commissioner Jay Clayton signaled his support last Thursday (Wall Street Journal, paywall) for PE-backed companies to be included in the $350 billion CARES aid package aimed at helping small businesses to combat the effects of covid-19. Clayton said he would “echo” issues raised by the industry to the effect that Federal regulations make it difficult for PE and VC-backed companies to qualify as “small businesses”, since all firms owned by a single investor are considered one business.

Email prepared by Connor Hussey and Graham Bippart