Fund Manager & LP Valuation

BRG brings extensive industry-specific experience through years of working with some of the world’s leading GP Managers.

As M&A activity for Fund Managers and secondary market volume for LP interests continues to grow, the need for fund manager valuations and LP valuations is becoming increasingly more frequent. BRG professionals have extensive experience in asset manager valuations spanning multiple strategies and asset classes including private equity and hedge fund valuations, valuation of carried interest, valuation of management companies, and estimating the fair value for GP interests of individual funds.

The need for such granular valuations may be driven by complex transaction structures, or a client’s need to value only a portion of the business – for example perform a valuation of the management company, a GP valuation of carried interest, or a valuation of existing versus future components of the Fund Manager. In private equity, we typically look at the value of the business in seven distinct buckets as illustrated in Figure 1.

Components of Value in PE Manager

Some secular trends driving growth in Fund Manager transactions requiring GP valuations include:

  • PE sponsors launching funds focused specifically on buying stakes in Fund Managers need fund manager valuations for M&A or disputes
  • Fund Managers looking to grow and diversify their asset base through strategic acquisitions
  • LPs buying Fund Managers to utilize as investment platforms need fund manager valuations for M&A or disputes
  • Founders of Fund Managers looking for a succession plan as they reach retirement age and seek valuations of carried interest
  • Investment banks divesting their Fund Manager businesses to comply with the US Volcker rule
  • Fund Managers looking to reorganize their ownership structure from a carried interest model to an equity ownership model (valuation of carry)

Services

Our professionals have acted as valuation advisors for numerous engagements in connection with estimating the fair value for GP interests and LP interests, including:

Fund Manager Valuations

  • IPO tax structuring
  • Basis for 1940 Act Test
  • Valuation of carry-for-equity exchanges
  • 83(b) filing in connection with share grants
  • Valuation in connection with a restructuring
  • Negotiations for non-hostile M&A transactions
  • Admission of new partners
  • Reporting of fair value for GP interest
  • Goodwill determination

LP Interest Valuations

  • Negotiations for secondary LP transactions
  • Transfer of interest from wind-down to new fund
  • Valuation of carry for tax reporting
  • Reporting of fair value for LP interest

LP and GP Valuation Considerations

  • Valuation considerations