IVCA Preview: Michael Gray, Partner at Neal Gerber & Eisenberg, on the Upcoming IVCA Luncheon, ‘Private Equity GP/LP Relationship: Dynamics of the Future’

IVCA Preview: Michael Gray, Partner at Neal Gerber & Eisenberg, on the Upcoming IVCA Luncheon, ‘Private Equity GP/LP Relationship: Dynamics of the Future’

September 16, 2015

One of the essential purposes of the IVCA is staying on top of the changes in the VC/PE industries, an ever-fluid evolution. In that spirit, the next IVCA luncheon – Tuesday, September 29th at the Conference Center at UBS Tower in Chicago – will be a discussion entitled “Private Equity GP/LP Relationship: Dynamics of the Future.” Sponsored by the firm of Neal, Gerber & Eisenberg, the event will explore topics including the strategy shifts in Private Equity fund economics, end-of-fund life issues, buying into the management company and spinoff funds.
 
The expert panel includes:
    •       Joanna Rupp, CFA, Managing Director of Private Equity, University of Chicago Office Of Investments
    •       Greg Uebele, Director - Private Equity, The Boeing Company
    •       Kelly M. Williams, President, GCM Grosvenor Private Markets
    •       MODERATOR - Michael Gray, Partner – Neal, Gerber & Eisenberg
 
Sponsor Neal, Gerber & Eisenberg LLP is a Chicago-based law firm providing legal business solutions to public and private entities of all types in connection with domestic and global business transactions and litigation. Their client base reflects a number of Fortune 100 companies, financial institutions, nonprofits and high net worth individuals. Representing the firm in the following preview to the IVCA luncheon is Michael Gray, Partner at Neal, Gerber and Eisenberg.
 
IVCA: Your firm is sponsoring the luncheon event, and you are moderating. Why is the subject pertinent for the attendees in the business atmosphere of today?
 
Michael Gray: There is a tremendous amount of fundraising and deal activity today.  The dynamic between the GPs and LPs is very important, and having their interests aligned in the fund documents has become a focus of all parties involved. Part of this dynamic is due to the credit crisis, as well as the regulatory environment.
 
IVCA: I know you'll be discussing this at the luncheon itself, so without going into specifics, what is the most interesting dynamic of the last couple of years in the GP/LP relationship, and why should attendees know the specifics of this dynamic?
 
Gray: Both LPs and GPs are looking for investments that are going to perform in an environment that is much more sophisticated and competitive. There is a tremendous appetite for co-investments.  And co-investments create a lot of issues that surround allocating co-investments among the LPs, the fees that are negotiated in respect to them, side agreements and regulatory issues. There are also some interesting end-of-fund issues that have effected LPs – like stapled funds, perpetual capital, in-kind distributions, etc. – which have people thinking about the next generation of funds, and are changing some of the fund terms.
 
IVCA: You've gathered an expert panel – Joanna Rupp, Greg Uebele and Kelly M. Williams – what areas of their expertise makes them ideal to discuss the topic?
 
Gray: Each of the panelists has a deep perspective as an LP, and in various facets of the industry, whether it’s emerging managers and spin-off funds or venture capital type investments. They also play up and down the spectrum, with a range of middle market buyout, larger buyout funds and venture capital. Some also see the business from the GP perspective, as well as have involvement in seeding funds and owning minority interests in the GP.
 
IVCA: What pure and relatable human elements – beyond the transaction itself – play most into GP/LP relationships, and why do their facilitators need to be cognizant of those elements?
 
Gray: At the end of the day, the most important element for LPs and GPs is the relationship among the GPs.  Stability is key within what are relatively small organizations. The LPs on the panel are very attuned to vetting the relationships among the GPs, as well as their ability to create returns.  The LPs are also ever focused on their reputation as investors in the GP Community – the LPs want to be known as good partners so they can get access to hard to enter funds and get larger allocations. 
 
IVCA: What surprises you about the business environment of today, that you think nobody in their wildest dreams could have predicted ten years ago, and why?
 
Gray: Technology and the advances in technology we use every day. It’s stunning, because we never thought we’d be able to hold in our hand a smartphone, and it would be as powerful as a computer was ten years ago and totally connected to the Internet, and most importantly to people. The unicorn venture-backed companies are not a fluke, and are not going away, because they are solving real business problems, and generating significant revenue.
 
IVCA: Neal Gerber & Eisenberg has had a long and fruitful relationship with the IVCA. What advantages has that reaped for your firm, and why would you recommend the association to other firms or entities involved in Venture Capital or Private Equity?
 
Gray: I think the IVCA is the best glue for the private equity and venture community in Chicago and beyond. It’s made a significant impact with lobbying, as well as getting the people in the private investment community together.  IVCA has helped grow the VC/PE industries in totality.  A perfect example is the upcoming luncheon, which gives the membership an opportunity to learn about and discuss important topics and network to foster further relationships.
 
The next IVCA luncheon, “Private Equity GP/LP Relationship: Dynamics of the Future” Sponsored by the firm of Neal, Gerber & Eisenberg, will take place Tuesday, September 29th at 11:30am, at The Conference Center at UBS Tower, One North Wacker Drive, 2nd floor, Chicago. Click here to register.