The Human Gulf in Private Equity Secondaries
There has been a great deal of recent press regarding the gulf between buyers and sellers of private equity interests. The disconnect is usually attributed to some analytic model—the vagaries of FAS 157, a lack of information, uncertain outlooks, etc. As a buyer of private equity interests, I believe that there is validity to many of the commonly-cited explanations. Nevertheless, focusing on the financial metrics alone imagines a world in which price is the only driving force in markets. It is important to remember that institutions never sell private equity. People within institutions sell private equity. Many of the individuals tasked with managing private equity portfolios have recently suffered through traumatic professional experiences. Buyers of private equity need have patience and understand the personal nature of private equity partnerships.
