It is obvious that Peter and Diana have to adjust their fundraising strategy in several ways,
otherwise the fund won't get started at all.
First the oce managers, as key families' trustees, play an important role. They not only
view FVP9 as competition, but they also have objections regarding their own compensation {
if any. These issues will surely have to be dealt with upfront if they want to gain the trust of
the families and their intermediary trustees { the family oce managers and banks where the
families have been consolidating. The Advisory Board should be viewed as an opportunity to
embark these trustees in structures that lead to a more LP10 friendly governance.
As Peter and Diana have a proven track record and gained considerable expertise in the
private equity industry including investments by wealthy families, they have a good starting
point to work on that. This is clearly a bene t they could stress. Other strengths they could
highlight are the strong relationship with auditor and tax advisor Arthur Andersen, the alliance
with the Family Oce Exchange and the establishment of an Advisory Board of limited partners
and other experts.
As of utmost importance, the terms and conditions should be written more LP friendly, and
thus be renegotiated. Limited Partners nd the following terms the most important and are
likely to focus their attention rst on:
Waterfall structure, carry calculations,
Clawback provisions,
Management fees,
GP11 capital commitment,
Investment strategy, limitations and guidelines, and
Permitted activities of GP's.
It is quite amazing that some important terms, as downside protection (including clawback
provisions) and restrictive covenants are apparently ...