facebook twitter instagram linkedin google youtube vimeo tumblr yelp rss email podcast phone blog search brokercheck brokercheck Play Pause

Insights - What's on our mind

Part II: Identifying Red Flags in Private Markets Due Diligence Thumbnail

Part II: Identifying Red Flags in Private Markets Due Diligence

In our last piece we talked about some of the red flags to keep an eye out for during your due diligence process. There are myriad issues that present themselves as you look at any investment firm, so highlighting them all would be impossible. Remember, this is a process, so you will become more attuned to potential issues as you gain experience. But, the key takeaway should be to keep your eyes open for those things that don’t seem to make sense. In this post I will shift my focus away from red flags to delve a little deeper into some of the ways PE managers may (or may not) differentiate themselves. While we expect all firms to be different and distinct, the truth is that most look pretty similar on the surface. While this observation is unscientific, I would bet that if you were to review the transcripts from 100 GP pitch meetings along with their marketing materials, you would find very little difference in the content of those presentations. Since most firms talk the same talk, it is likely the subtleties that set one firm apart from another. So, how do they do it?

Choosing an Advisor Thumbnail

Choosing an Advisor

Most Americans could use the help of a financial professional at some stage in their life. The time when this occurs is different for everyone of us based upon our level of comfort and experience dealing with our finances and the level of complexity we are facing. For many, the burdens of managing a career, a family, and unforeseen life events (a sudden death, a divorce, a financial windfall, college expenses, taxes, etc.) tells us that it is time to seek out help. When I speak with clients I tell them the appropriate time to speak with a financial advisor is when they have questions that they cannot easily answer themselves. Don't wait until you have a problem, but seek out help when you first notice it or notice that you aren't comfortable making a decision. Most Americans could benefit from working with an advisor at some point in their life.

What's the Difference Between Private Equity and Venture Capital? A Very Brief Summary.  Thumbnail

What's the Difference Between Private Equity and Venture Capital? A Very Brief Summary.

Private Equity (PE) and Venture Capital (VC) are investing strategies that sit at the end of a spectrum of private company investments. VC sits on one extreme and focuses on investing in a range of start-up and growth companies before they become profitable. us, they require private investors to provide funding to help them reach their potential. PE sits on the other extreme of the spectrum and invests in mainly mature, profitable companies and some growth companies, that can handle leverage to help generate investor returns.

Identifying Red Flags in Private Market Due Diligence Thumbnail

Identifying Red Flags in Private Market Due Diligence

There is no shortage of information out there about due diligence on private assets and managers of private funds. When I started in the business many years ago, I remember receiving a research paper on the topic from Goldman Sachs, which amounted to a very long checklist of questions to ask to help vet a manager. As someone starting out in the industry, this was a great tool, but as I advanced in my career and met hundreds upon hundreds of managers in thousands of meetings, it became clear that there was much more to the due diligence process than could be captured in a checklist. As one of my mentors liked to say, “…our job is to be like Columbo, always looking behind the obvious facts to uncover the truth.” While we weren’t always prepared with a gotcha question to get to that truth, it was usually the diligence occurring outside the lines that yielded the best insights. With this series of articles, I will aim to add a different perspective to the academic literature on the topic by relating lessons that I have learned in the trenches. I will also provide some observations on interesting insights I have found through the thousands of human interactions I have had interviewing general partners (GPs).

Reflections on the Current Market Environment - New Investor Edition Thumbnail

Reflections on the Current Market Environment - New Investor Edition

The current level of the stock market is an enigma for many. Stocks appear to be reflecting rosy future growth projections and many large cap index funds are seeing their returns driven primarily by the growth of stocks like Apple, Google, Facebook, Netflix, Tesla, Microsoft and Amazon. For any new investor, this frothy environment represents a difficult starting point for their portfolio. The good news is that if you have a long term time horizon, namely more than ten year and up to 50 years depending upon your current age, the stock market is still a great tool for you to help grow your savings. Distortions within indices tend to be temporary and over the long term the index will readjust to reflect the performance of the index asset class.