About me

I’m a writer and reporter based in Brooklyn, NY. I specialize in niche areas of business and legal issues, helping readers make sense of trends and stay abreast of the news most relevant to them. My recent work has focused on private equity investing, with a particular focused on limited partners, and on legal reporting, particularly government contracts law and federal spending.

In private equity, I help track where the money is flowing, which strategies are popular, and the strategic evolution of the largest limited partners in the market, especially public employee pensions. I’ve also reported on public pensions’ other investment strategies, including their leveraging of their financial weight to pursue goals like corporate diversity, climate change mitigation, and fairer executive pay practices.

I’ve gone in depth on evolving federal acquisition regulations, NASA’s efforts to spur commercial space flight, legal battles over major weapons acquisitions, and the government’s efforts to shore up cybersecurity for federal agencies and contractors.

But I don’t just cover PE and government contracts – since 2016, I’ve been freelancing on topics including wine, health law, and politics.

Check out the links to the left for examples my work.

Investors Are Seeking More Support for Private Equity Co-investments

The uptick in outsourced co-investment platforms is part of ‘the next generation of thoughtful portfolio construction.’

By Dietrich Knauth

Pension funds are increasingly seeking outside help with their private equity co-investments, looking for partners that can help them build a more diversified co-investment portfolio, see more deals, and react faster to opportunities.

Pensions typically invest in private equity funds as a limited partner, paying a management fee of two percent of committed capital plus a 20-percent “carried interest” fee on higher profits. Co-investments offer limited partners the chance to invest in a company alongside a private equity firm, but outside of a traditional fund structure, often with no management fee and no carried interest. While LPs like the fee breaks, PE firms can use co-investments as a perk for key investors, or to invest in deals that may be outside the scope of their fund’s mandate, such as getting around a provisions that limits the percentage of a fund that can be invested in a particular company or a particular industry sector.

Despite those benefits, co-investment discussions are “frustrating, and often fruitless,”according to a June 2019 paper by Hamilton Lane. A majority of private equity GPs surveyed by Hamilton Lane said that less than a quarter of LPs that ask for co-investment are actually executing on those opportunities.

Most limited partners, pensions included, don’t have the bandwidth to respond quickly when an opportunity arises, let along evaluate enough deals to build a diversified portfolio of co-investments, according to Richard Hope, a managing director on Hamilton Lane’s global investment team. An LP that can quickly sign off on a deal – or even quickly say “no” – will spare a GP the distraction of trying to scare up extra capital at the same time it is negotiating a co-investment deal, Hope said.

“GPs want certainty of capital,” Hope said. “In a competitive deal market, GPs want to know who’s with them, and how quickly they can respond.”

Despite the challenges, the value of co-investment deals has more than doubled since 2012, reaching $104 billion in 2017, according to a 2018 report by McKinsey. Hamilton Lane attributes much of that growth to dedicated co-investment funds and more bespoke solutions run by institutional managers.

Read the full article, as published by Chief Investment Officer: https://bit.ly/2ZPjH1c

GP-led secondaries worsen LPs’ workload concerns

Limited partners don’t always feel as if they have enough time or resources to evaluate GP-led secondary processes, and in general they feel that private equity is taking up more of their bandwidth, a survey by Coller Capital shows.

GP-led secondaries are an increasingly mainstream part of the PE market, with two-thirds of North American LPs and three-quarters of European LPs reporting that they have experienced one or more GP-led secondaries processes in their portfolios. Almost half of LPs expect time and resource constraints to cause headaches in future GP-led secondary transactions, according to Coller Capital’s Summer 2019 Private Equity Barometer.

GPs are beginning to explore potential secondary transactions earlier on with their existing investors, in part out of respect for concerns over time constraints, according to Eric Foran, a partner with Coller Capital. While a GP may believe that 20 business days is an appropriate amount of time for an investor to receive notification and review a fund restructuring, that can cause difficulty for bandwidth-constrained LPs.

“An LP needs to digest a lot of information, and then potentially re-underwrite a new investment if there is a rollover or reinvest option,” Foran said. “If they’re learning about the transaction for the first time at the start of a 20-day period, then that is a lot of work to process.”

Read the full article, as published by Buyouts, here: https://bit.ly/2MQUzFi

LPs lower expectations for PE, fret about deal flow

A majority of PE investors expect returns in the asset class to decline in coming years, and a growing percentage are beginning to vet potential partners on their ability to drum up deals.

GPs and LPs expect returns to decline, and both are concerned about competition for deals and high purchase prices for companies, an eVestment survey shows. But LPs are more pessimistic: 41 percent of investors said they were very or extremely concerned with competition for deals, compared with 25 percent of fund managers.

“Competition for deals was the number one concern for both fund managers and investors,” said Graeme Faulds, director of product for private markets at eVestment. “From the investors’ perspective, there is concern about the amount of dry powder in the market, and that is probably what’s driving this concern regarding the competition for deals.”

Competition took a much more prominent place among industry concerns compared with 2018, when survey respondents ranked it as the fourth-highest concern.

Check out the full story, published by Buyouts: https://bit.ly/2RibZcD


Five Questions With Aberdeen’s Whit Matthews on spinouts and independent sponsors

Whit Matthews is a senior investment director at Aberdeen Standard Investments. He spoke with Buyouts about Aberdeen’s approach to spinouts, independent sponsors and first-time managers.

What types of emerging managers get your attention at Aberdeen?

There are typically two types of emerging managers in this market. You have the groups that spin out of another firm. They have track record attribution, they’ve all worked together before – it’s a directionally clean story, and those managers tend to get traction quickly and raise successful funds in relatively short order.

At the other side of the world, and there are more of these types of managers, you have the professionals that haven’t run a firm before, they haven’t managed a portfolio before, and maybe they they haven’t worked together before. In those types of situations, operating as an independent sponsor and proving out your ability to drive deal flow, get deals done, and work with your new partners under a new umbrella is something that a lot of LPs want to see.

Check out the full interview, as published by Buyouts: https://bit.ly/2ImzGxp

Five Questions with Makena Capital’s Brian Rodde on first-time funds

Makena Capital is a perpetual-capital manager that commits about $600 million a year to PE. Buyouts spoke with Managing Director Brian Rodde, who oversees portfolio management and manager selection in buyouts and VC, about first-time fund commitments.

Some LPs, pensions in particular, try to mitigate the risk of first-time funds by committing lower amounts and by betting small parts of their portfolio on emerging managers. What’s your view?

We want to make sure that every investment we make is impactful to our portfolio. We don’t think it makes any sense to make a smaller commitment to a smaller fund [just to avoid] being too concentrated within that fund.

Check out the full article, as published on PE Hub: https://bit.ly/2KT7aoQ

Five Questions with Stanford’s Ashby Monk on fee transparency

Stanford University Prof. Ashby Monk advises pensions on innovative approaches to PE. He spoke with Buyouts about the dangers of pension fund complacency toward high PE fees.

You recently took to Twitter to disagree with a pension fund CIO who was happy to spend millions in PE fees to get billions in returns. Why?

In saying “millions to get billions,” you are in effect justifying a high fee to an external partner solely on the basis of the performance delivered. But defining performance in absolute terms like this tells you very little. It doesn’t tell you how much risk they took, it doesn’t tell you the strategy or whether that strategy is commoditized. It doesn’t tell you if you could and should build that strategy internally or find partners that can offer better terms.

Check out the full article, published by PE Hub: https://bit.ly/2x5c3CZ

New placement agent focuses on niche firms, global opportunities

APT Fund Advisory, a new placement agent, is trying to connect smaller global GPs following niche strategies with large North American investors.

The New York firm is helping raise five funds: a Brazilian early-stage venture technology fund, a European consumer-buyouts fund, an energy-and-minerals operator fund, and a tech-focused private credit fund that lends against enterprise value rather than Ebitda. All funds are targeting $500 million and below, and two are first-time funds managed by experienced investors.

The funds’ specialized nature speaks to a growing place for sector specialists in LP portfolios, said partner Terry Wetterman.

“LPs have gotten more comfortable with more and more specialized managers going after niches, so long as they’re getting at opportunities in a proprietary way, or they’re able to add some kind of value that a generalist wouldn’t,” Wetterman said.

Read the full article, as published by Buyouts: https://bit.ly/2xkkfzA

Five Questions with Hark Capital’s Doug Cruikshank

Doug Cruikshank is head of fund financing and Hark Capital at Aberdeen Standard Investments, where he leads credit funds that make NAV loans to older PE funds’ portfolio companies. Cruikshank spoke with Buyouts about the evolving liquidity market within PE.

How is liquidity evolving in the PE market, and where does Hark Capital fit within that evolution?

As asset classes mature, which is what  PE Is continuing to do, they get more liquid., and they get more liquid in more spots along the chain. The chain goes everywhere from the very beginning, where capital call line banks provide liquidity early, on all the way to the end of the chain, which deals with secondaries.

We just provide another piece in that chain, after the investment period of a fund but before the fund really gets to the end of its life and doesn’t have any more assets. We’re a natural extension of the liquidity improving across this asset class, and we think that that’s positive for both the LPs and the GPs.

Check out the full interview, published in Buyouts: https://bit.ly/2Ioigkg

Middle Market Deal of the Year: L Catterton built parents’ trust in Zarbee’s Naturals

Why they won: 9.7x multiple and 43% IRR, revenue increased 15x over a seven-year hold

When L Catterton in 2011 acquired a majority of Zarbee’s Naturals, it bet it could build a new growth category that took advantage of long-term consumer trends around brand authenticity, health and wellness, and investing in children’s products.

When it sold the company to Johnson & Johnson Consumer in 2018, after expanding Zarbee’s from a line of honey-based children’s cough syrup into a market-leading provider of natural over-the-counter products, that bet paid off – to the tune of a 9.7x gross multiple and a 43 percent IRR.

L Catterton co-CEO Scott Dahnke said the deal reminded him of a quote from the 1980s TV show “The A-Team”: “I love it when a plan comes together.”

Check out the full article, as published by Buyouts: https://bit.ly/2Xj4ebK