Lead Your Private Portfolio out of the Economic Crisis
Create a Private Equity Action Plan to Emerge Successfully
Do not miss out on the recovery by getting stuck or realizing losses in troubled investments.
You should always know if your private investments are on track.
But there is a problem…
- The Great Shutdown happened fast
- Portfolio harm has likely occurred but has yet to surface
- Many investors feel overwhelmed
- It is a daily battle to emerge from a recession unscathed
We have been through this before.
We use crisis-tested action plans so investors like you gain control.
Properly monitor the health of your private direct and private fund portfolio and activate expert resources to achieve the results you want during times like these.
The Stakes are High.
You have invested a meaningful amount of your time and capital to curate a portfolio of private direct and private fund investments in pursuit of substantial growth.
40% of family capital is allocated to alternative investments including 34% to illiquid private fund, direct, and real estate investments and 6% to other illiquid/hedge funds. This substantial capital allocation once again mirrors the size and scope of institutional endowments.
There is Growing Demand for Private Directs
Family offices have been increasing allocations to direct investments – a debt or equity structure directly into an operating business. Direct investments can be a good fit with a family’s patient capital but such long holding periods and high concentrations amplify risks.
- Getting “stuck” dramatically increases opportunity costs
- Significant loss from a single investment
Avoid the Liquidity Crunch.
Left alone, economic slowdowns have a long-lasting negative impact on private investment portfolios.
Distributions to many investors will slow or stop altogether.
Capital calls will increase up to 2x – as some investments will need money to survive and others to opportunistically grow.
The Crisis Waterfall
Economic Conditions Rapidly Deteriorate- Unemployment increases and production slows.
- Demand and revenue drops.
- Financing dries up.
- Defaults and bankruptcies skyrocket.
- Price declines happen in real time, limiting access to liquidity as investors do not want to sell at a loss.
- Volatility increases dramatically with big market movements occurring at surprising frequency and over long periods.
- Price and valuation reporting are delayed though value is being lost in real time.
- Downside risk dramatically increases.
- Invested capital is likely facing risk of complete loss or getting stuck for years.
- Return expectations plummet if not disappear.
7 action items for Family Offices and their Wealth Advisors to do during an economic crisis.
Private Portfolios can hide looming problems if not examined carefully. A simple shift in mindset can help you protect your interests.
Things are not always what they seem. Trust, but verify.
During the 2008 crisis, our diligence process uncovered significant gaps between perception and reality.
Before V3,
Families Heard…
“Only a few of the investments will face challenges.” CIO, SFO
“I’ve met my commitments, so they won’t need any more money.” Matriarch, SFO
“We get updates every 3 months, so wait and see.” COO, SFO
“Our Big 4 audit report says the investment is at par value and holding up.” Board Member, Private Direct Investment
With V3,
Families Learned…
More at Risk | including unresolved conflicts of interest.
Incorrect Valuations | overstated or understated.
Liquidity Crunch | distributions slowed or stopped while capital calls increased.
Distressed Buyers | offered deep discounts to buy assets.
Holding Periods Extended | by as much 10+ years.
Disclosures Declined | leaving investors with little clarity on future expectations.
V3 Achieved
Significant Results…
More than a Full Recovery
of a Highly Distressed Portfolio
Generated and protected
significant value
Produced significant liquidity
in a dramatically reduced timeline
Turn Uncertainty Into Confidence.
When private portfolios are hit by a financial crisis, outcomes can be improved. Know your options. Mitigate loss with answers to these questions.
Will I have trouble meeting financial commitments?
Will my private investments survive and how much will I recover?
I’m not sure when I will get my money back?
How do I get timely and accurate information to understand what’s really happening in my private portfolio?
I don’t want to put good money after bad, which investments should I take steps to protect?
Am I positioned to capture new opportunities – make new private investments that can make me money?
Explore Your Customized Private Equity Action Plan
Over the last 10 years, we’ve honed our process to quickly and thoughtfully construct and execute Action Plans in a crisis to help private investors address issues and capitalize on opportunities.
It worked during the 2008 financial crisis. It’s working again now.
Benchmark Performance
- Benchmark your private portfolio performance against V3 proprietary metrics up until the crisis started.
- Establish a baseline and identify red flags from your original expectations.
Reassess Risk & Priorities
- Compare customized risk scores for your private portfolio pre-crisis and in-crisis.
- Identify potential gaps and failure points.
- Prioritize next steps to address looming issues.
Take
Action
- Take action to address specific risks and opportunities identified.
- Engagements are milestone based with a defined scope, timeframe and cost.