Creative Alternatives: Process Overview
Paul Capital's due diligence process is flexible and tailored to meet the specific needs and constraints of each seller.
Our typical process involves three steps
Each opportunity is reviewed to ensure that it meets minimum investment criteria. The Qualification stage is a rapid review, typically taking less than 48 hours for the provision of feedback.
All relevant fund documents and current portfolio financial reports, along with information from the Paul Capital databases, are reviewed to provide initial pricing. The Review stage takes anywhere from a few days to a few weeks, depending on the size and complexity of the portfolio. The goal is to be timely with an initial response in order to facilitate a decision by the prospective seller. There is no cost for this service.
Should our initial pricing be satisfactory, due diligence is completed and a firm purchase commitment is provided. This final due diligence takes one to four weeks and generally includes conversations with the general partners of the largest funds in the portfolio. When an agreement has been reached, we draw up transfer documents and prepare to wire funds for closing, as well as obtain the general partners' consents to transfer.
Paul Capital employs an extremely thorough investment screening and due diligence process with the goal of meeting seller objectives and offering a fair price in transactions. Our very positive relationships with a large number of GPs help facilitate this process and make us a buyer of choice.
Due Diligence
We approach this process with a high degree of efficiency. Paul Capital's due diligence is comprehensive and thorough, with the goal of delivering the best possible pricing. We have cultivated and aggregated experience with over 300 different fund managers, which allows us to price portfolios promptly and with maximum value to sellers.
Pricing Factors
Pricing is most sensitive to the quality of a fund's underlying assets. Paul Capital's strategy is to invest with the best GPs and their best funds in portfolios that can and should command excellent value in a secondary transaction. Pricing is further affected by the fee structure of underlying funds, as well as the quality of the GP particularly when buying relatively less funded commitments.
Fund Transfer Process
Paul Capital has successfully negotiated very complex fund transfer restrictions and is experienced in managing such logistics in a manner that will maximize the probability of a successful transfer. We have considerable knowledge of the Investment Company Act of 1940, ERISA Rules, taxation and rules regarding publicly traded partnerships.