Preparing for a Difficult Fundraising Environment

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					        Preparing for a Difficult
       Fundraising Environment
                        January 22, 2009

                    Larry W. Beaupre, Partner, Proskauer Rose LLP
John F. Aiello, Counsel, Goldman Sachs Alternative Investments & Manager Selection
                  Counsel, Private Equity Group, Goldman Sachs & Co.
           Ann St. Germain, General Partner & CFO, Grove Street Advisors
          Cheryl Goyette, Chief Financial Officer, Fairhaven Capital Partners
                         The Ups And Downs Of The U.S. Fund-Raising Cycle
                               Commitments to All Types of Private Equity Partnerships ($ Billions)
                         350
    Fund of Funds                                                                                                             $325.7
                                                                                                                               28.7
    Secondary &          300
    Other                                                                                                                      10.4
                                                                                                                                8.9
    Mezzanine                                                                                                        $259.1            $265.5
                                                                                                                               33.1     12.9
                         250                                                                                          22.8               6.7
    Venture                                                                                                            6.3
                                                                                                                                        40.2
    Capital                                                                                                           20.9
    Buyout/Corp.         200                            $184.0                                                        30.6              24.7
    Finance
                                                                                                            $170.8
                                                          23.6
                                                             2.7                                             19.6
                         150                            5.0                                                   5.0
                                                                                                              4.8
                                            $116.7                 $117.2                                    26.7
                                                                                                                               244.6
                                $103.3                   73.7        10.3
                                               16.7                      4.1
                                                                                                 $101.2
                         100      12.6
                                            5.0   2.0              5.2                              10.2
                                      2.5                                                              5.9            178.6             181.0
                                4.2                                                              5.9
                                  20.7                               40.2      $67.2
                                              48.0                                                 17.6
                                                                                8.5     $54.5                115.7
                                                                            2.5     1.9
                         50                                                    11.4        6.7
                                                         79.6                                  9.4
                                  63.3                                                 3.4 4.6       62.0
                                                                     57.5
                                              45.0                             43.0
                                                                                          30.6
                          0
Source: Dow Jones
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Private Equity Analyst
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What Will Occur in 2009?
   Denominator effect
    Liquidity Squeeze
       Credit Crisis
    Falling Valuations
What do you think the temperature of
the current fund raising market is?
1) About the same
2) Definitely cooler
3) Downright frigid
 Liquidity crunch/denominator
effect: What does this mean for
       GPs and investors?
Which sectors/strategies are hot?
        Which are not?
What do you have to show LPs?
What is the biggest issue that you
face when marketing your next fund?
1) Past performance/lack of exits.
2) New group (not a household name -- yet).
3) Succession questions -- Who's the next
   generation of rock stars?
4) Investor base -- Who to let in and who to
   keep out?
Should you hire a placement
          agent?
Impact of secondaries?
What is the biggest hot button term
for investors?
1)   Management fee
2)   Team incentives (who gets how much carry)
3)   Distribution waterfall
4)   Key person
5)   Other
  Summary: Key changes to
fundraising practice in a tough
         environment
What’s the good news?