Understanding Risks and Regulations in Private Markets

Adverse selection and fraud are mammoth risks that lurk in the often opaque underbelly of private markets. Investors should be thoughtful about their access point to these markets. Here are a few questions that may be helpful in guiding your approach: - Are interests aligned? Who is getting paid and for what? Is the investment partner paying to market the deal (poor quality signal)? Are the key principals investing their own capital in the offering? - Why am I seeing this deal? Identify why the investment partner is raising capital through your access point, is it because large-scale institutional investors passed? - Who is negotiating terms? Is the individual or team responsible for negotiating/reviewing key terms sophisticated and well-positioned to identify key risks? - Who is monitoring this deal post-close? Is there a team in-place, or resources dedicated to monitoring performance and engaging with the underlying investment partner? - Who is driving this investment decision? Are the principals responsible for sourcing/signing-off on the investment experienced? What is their prior track record? - Does the access channel have a track record? If not, why? How will they be held accountable? - What was the due diligence process and who conducted it? Investing is not best done as a hobby. Map out the incentives and be mindful of these risks. More here 👉 : www.10east.com

I've had a number of discussions recently focused on understanding potential impacts of the recent change in government on regulatory compliance and third-party risk management. While many organizations are in the process of assessing impacts and scenario planning potential outcomes, there are a few factors for consideration: 🔹 Historical context - A review of previous Republican control periods shows a trend towards significant deregulation, particularly affecting energy, finance, and healthcare sectors. 🔹 Regulatory shifts - Current trends suggest a move towards deregulation that necessitates adaptive compliance strategies from businesses. Adjustments are likely needed in response to healthcare reforms and banking regulation modifications. 🔹 Third-Party Risks - As regulations evolve, reassessing vendor risk profiles is crucial. Enhancing due diligence and adapting risk management strategies are imperative to maintain stringent security and compliance standards. As organizations re-evaluate their global supply chains, we are likely to see a trend towards de-fragmentation. 🔹 Strategic Adaptations - Investing in compliance technologies and strengthening internal control related functions are more important than ever. 🔹 Emphasizing agility and proactive planning, strategic recommendations aim to equip businesses to thrive amid regulatory changes. 🔹 Future Preparedness - Encouraging ongoing education and strategic foresight, it's vital to stay ahead of the curve to navigate this shifting regulatory landscape effectively. Navigating these changes requires a keen understanding of the implications and a proactive approach to compliance and risk management. #operationalresilience #supplychainmanagement #Thirdpartyriskmanagment #southasianwomenonboards #NACD #NCBE

PE firms: want to maximize your PortCo's valuation? Don't let this “hidden trio” catch you off guard. They can your returns: Regulatory, security and political risks. Consider these 2 scenarios from recent conversations I’ve had: 1) Your PortCo has manufacturing in Latin America. You've operated there for decades without much concern for security. You have a clear understanding of the security risk, but potential buyers don’t. Lack of objective diligence and security and crisis planning here narrows your pool of potential buyers, reducing negotiating leverage, compressing multiples. 2) Your energy transition business has been acquiring downstream battery storage companies Failing to scenario-plan how a change in government could impact these businesses may expose your buyer to a different political risk landscape. Savvy buyers will demand a "political risk" discount. De-risking your transactions should apply as much as when you buy the business, as when you sell it. Don’t let your valuations bear the brunt of overlooking these “other” risks. #politicalrisk #securityrisk #valuations #sellside #privateequity #mergersandacquisitions