Alignment of Interest

When dealing with waterfalls, there are tools that can be used to create economic alignment from the outset.

An incentivised management team is crucial to ensuring ultimate success in GP-led secondaries deals.

Finding the pricing sweet spot to satisfy sponsors, buyers and LPs is tougher than ever in today’s market.

Conflicts of interest can arise within the LP base as LPACs act in their own interest, not in the interest of the fund.

For the GP, internal alignment is another opportunity to manage team dynamics. Third parties will want to see that the right people participate in the economics.

Some sponsors are still able to drive aggressive terms in GP-led deals, though perhaps not for much longer.

As an increasing number of sponsors turn to secondaries processes, doubts are being raised about the market’s building blocks. Just how aligned is the secondaries market today?