Why do PE firms flip assets <2 years in?
Have seen a decent number of recent(ish) deals where a PE firm exits a stake after 2 years.
Wrote a whole long question here but didn’t post properly but I just don’t get the point of doing this. Isn’t it just hurting the MOIC/carry pool to sell this fast?
Every situation is different of course but the primary reason is to take some money off of the table when an asset has quickly grown in valuation. This could be because of company performance or secular trends or whatever, but it's not enough for fund managers to just show that the valuation of their assets has increased, they have to return actual dollars to their LPs. It's the same reason why VCs will sell portions of their positions on the secondaries market. While paper returns are great and all, being able to actually receive money back wired back to you as an LP is the actual purpose of the industry for investors.
Depending on where funds are in their lifecycle good to get an early win, high IRR deal on the board to anchor the IRR for the fund high (helps ensure you clear the hurdle).
Acquired later in the lifecycle of the fund
Stupid offer comes along from a strategic.
Imminent negative macro tailwinds for the sector
etc
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