Registering with the Securities and Exchange Commission will mean there are going to be a number of phrases GPs will not be able to use when going out to market. The language used in marketing materials and presentations must be scrutinised to assure that the firm is complying with SEC guidelines. But, that doesn't mean you can't convey the same message by tweaking a few words here and there.
PEI's sister web site PEM spoke with compliance officers about this tricky situation. Below are a few examples of some statements you will want to avoid and ways you can fix them.
• Statement: Our due diligence process is unrivaled.
• Statement: Our unique portfolio construction strategy produces outstanding returns for our investors.
• Alternative: Our portfolio construction strategy emphasises investments in XYZ, which we believe has the highest potential to produce strong positive returns for our investors.
• Statement: We grow companies and create shareholder value.
• Alternative: Our strategy is to grow companies by improving management and strategic planning in order to create shareholder value.
• Statement: We will provide a portfolio of 15 to 20 top-tier private equity funds.
• Alternative: Our projected portfolio is 15 to 20 private equity funds managed by teams which we believe have the necessary skill and deal flow to provide top-tier results.
• Statement: We attract the best entrepreneurs.
• Alternative: We attract experienced entrepreneurs with strong operating skill sets.
It will of course take some getting used to, and IR teams may indeed find themselves in a few special training sessions on the matter, but GPs will still be able to use language that distinguishes them from competitors.