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Private Equity Firm Happy To Let Investors Hire A Babysitter

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Really, Freeman Spogli & Co. wouldn’t have it any other way. It is simply the nicest way of thanking it for all of the money it’s made for you over the past three decades.

Documents obtained by The New York Times show that the independent adviser appointment was disclosed after officials at the Securities and Exchange Commission raised questions about several of the firm’s practices.

According to the letter, S.E.C. officials said that Freeman Spogli appeared to be violating fee-sharing arrangements with its investors in two funds, despite promises to the contrary. And Freeman Spogli, the S.E.C.'s letter said, appeared to be reaping fees from investment-banking-type transactions without fulfilling the regulatory requirement of being registered as a broker-dealer.

Now that all of that is out of the way, perhaps you’d like to return the favor by leaving them the hell alone about those fees?

Facing pressure from investors and heightened scrutiny from federal regulators, some of the largest private-equity firms are giving up their claim to fees that generated hundreds of millions of dollars for them over the years….

The payouts being reimbursed, known in the industry as transaction and monitoring fees, have provided many private-equity firms with a steady income stream augmenting their share of investment gains on deals, which remain the key source of profits from their buyout funds.

Entering the Secret Garden of Private Equity [NYT]
Fees Get Leaner on Private Equity [WSJ]



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