Hi, I was wondering if anyone could provide an insight into whether there is any modelling done for a co-investment and secondaries fund? If so, how does it work?
As co-investments are a minority interest is there any modelling done on the individual company by the secondaries fund? Do they get involved with building out a DCF and LBO model? Or do the GP simply provide their LBO model and valuation to the secondaries fund who just read through it and then decide whether to co-invest?
And do the co-investments from the secondaries fund come through as 100% equity or do they also get involved with raising some debt to leverage up?
Thanks!
I had a modelling test by a secondaries/co investments, it was DCF.
If your firm manages money, then it is your responsibility to conduct due diligence on investments including modeling out your own view of the opportunity. Can the PE firm help color that view? Yes, absolutely, and they will conduct a lot of the nitty gritty DD. But to answer your question: no, secondaries/co investment funds are not simply looking at an LBO built by some PE associate and just accepting it "as is" (or at least, they shouldn't be) when they decide to hit the "go" button.
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