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The Fund of funds and hedge fund spaces are becoming increasingly crowded and competitive. There is immense pressure on funds to perform and grow, but only a small percentage of funds have the track record, marketing strength and resources to build a strong business platform with long-term prospects for success. At the same time, many fund managers believe that their funds have tremendous potential and ultimately should be valued at and bought for high multiples. This type of unrealistic thinking may prevent many of these fund managers from performing the necessary steps to ensure their funds’ growth and success. As a result, many fund managers, of both large and small funds, are advised to assess their strategic options, including entering into win-win transactions that can help them reach key milestones.
Many fund managers expect a lucrative buy-out
Given the highly publicized major fund transactions that have occurred in recent years, many fund managers have come to expect an exit strategy involving a lucrative buy-out. They believe that they should receive huge premiums for their “sweat equity,” cash flows, asset base, infrastructure, track record and growth potential. However, current market trends indicate that very few funds will ever realize value of that magnitude. The reality is that there are a limited number of fund buyers and an even much smaller number of fund buyers looking to pay out a lottery jackpot price.
The best candidates for r...................... To view our full article Click here
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