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Private equity

Ok, let’s focus - what was the question about the GP vs Independent valuation? Anybody remember what it was and/or what the right answer was??

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scottydoesknow- if your handle is from eurotrip, you with 8 posts are already one of my favorites on this forum.

Kwekoolio Wrote:
——————————————————-
> Ok, let’s focus - what was the question about the
> GP vs Independent valuation? Anybody remember what
> it was and/or what the right answer was??

i think the question was something like which of the 3 statements are right. i remember going with the one that it is the GP that does the valuation of the asset. i thought..after all it is the GP that chooses the ivnestment portfolio….haha

HydrogenRainbow Wrote:
——————————————————-
> Kwekoolio Wrote:
> ————————————————–
> —–
> > Ok, let’s focus - what was the question about
> the
> > GP vs Independent valuation? Anybody remember
> what
> > it was and/or what the right answer was??
>
>
> i think the question was something like which of
> the 3 statements are right. i remember going with
> the one that it is the GP that does the valuation
> of the asset. i thought..after all it is the GP
> that chooses the ivnestment portfolio….haha

+1

NO EXCUSES

C. was ‘GP valuation or third party by GP’ but I’v found in the schweser book that usually GP does valuation or third party hired by LP.

I put B ‘time weighted return’

A was incorrect.

IRR = $ weighted return

king_kong Wrote:
——————————————————-
> IRR = $ weighted return

What was the question related to this answer?

_________
Forza Juve

Hey guys,

GP does valuation. Thats what a private equity firm is: Partners (The GP’s) and the VP’s associates and analysts valuing investment ops and investing the fund on behalf of the LP’s. Third parties are also called in when necessary (especially for due diligence).

I had “C” for every answer. And I think I agreed with all but one of the consensus…

The clawback, etc. question puzzled me. The question said “assuming positive returns…” Trick or not?

Yeah which one had better terms? Annual clawback or cumulative?

KCollier Wrote:
——————————————————-
> Yeah which one had better terms? Annual clawback
> or cumulative?

Annual clawback provision is better than at termination because GPs have to return a portion of their carried interest back to investors at the end of the year (true-up). In summary:

1) Which fund had better fee structure? Answer: Fund C
2) Which fund had a better governance(?) structure? Answer: Fund A - Annual True-up from Clawback

_________
Forza Juve

C, A same here

HydrogenRainbow Wrote:
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> It is because the total called down capital is
> 60k. it should be calculated as cumulative
> distributions over cumulative called down capital
> and not comitted capital.

I sat 5151 and could well be wrong, but I was under the impression that called down capital and commited capital were both 70k.