Private Equity Professionals
Case Study 1 – Management of affairs, liquidity management, bespoke DFM and minimal restructuring.
- Not interested in detailed material, but wanted a style and personality fit that would be unobtrusive to business/personal life.
- Looking for an “undoubted trusted advisor who solves issues quickly, efficiently and project manages my planning”
- Early in the relationship, established how much cash reserve was suitable, where should it be and how should it be managed.
- Addressed gaps in family balance sheet whilst remaining liquid to support obligations should they change or be accelerated.
- Provided a bespoke DFM mandate given high risk and private equity allocation, allowing for strong views on certain asset classes
- Advice was firm but did not try to prove we knew more than the client – each has own area of expertise.
- Client felt obligated to pay tax so no restructuring and did not like the underlying of tax advantageous products, so were avoided.
- Diversified into real assets such as property as additional funds were generated – important to hold things you can touch/enjoy.
- Developing relationships with his children to raise their levels of knowledge and help the family manage the transition of what is a significant capital sum.
Case Study 2 – Building of VCT portfolio, currency monitoring and minimal main market exposure.
- Fairly pronounced barbell portfolio of cash and private company investments.
- Building VCT portfolio to provide some income and as a relatively safe way to create tax free dividends once retired.
- Cash build up due to level of earnings and also earmarking for commitments; no leverage at all on balance sheet
- Main market exposure minimal, partly driven by lack of time to spend on the matter and partly by appreciation of the level of risk in the private/unlisted portfolio.
- Organising non-work related finances, utilising all allowances where appropriate.
- Ongoing assessment of cash flow and allocation to different currencies against expected calls and distributions.
- Identifying the appropriate strategy for the family, such as a simple DFM portfolio that the family can latch onto if he is not around and withdraw from to pay the bills.
Scenario Example – Market downturn
- Provided support by acting as a sounding board, offering an emotional outlet and advice to the client.
- Reworked cashflows, altering the liquidity and debt profiles to ensure all obligations can be met without being a forced seller of any assets. Ensure debt facilities are not facing margin calls.
- Producing a consolidated report of cash balances, making sure there is enough liquidity to meet increased capital calls.
- Capitalised on market decline; invested cash into DFM and reviewed whether re-basing of gains can be remitted.