It seems obvious that your investors want to see partners’ personal wealth tied up with their capital. It’s one of the reasons the private equity model works; we win together, we lose together. Now some business school researchers in Norway have investigated how the GP commitment affects investment behavior and, sure enough, the more skin in the game, the lower risk the acquisition targets (but the more leverage gets used). “The GP selects the company by trading oﬀ the expected cashﬂow against the downside risk,” say the researchers.
Finally, because it is Friday and peak vacation season, here are five of our most read stories from the first half of the year:
Email prepared by Toby Mitchenall.