Disturbing trend, NYC, NY, USA
4 weeks ago •reported by user-kzcd9243
New York, New York, United States
Private equity firms that demand cash calls in higher numbers, but returns are in small numbersI have signed up for a few private equity "deals", only to realize a disturbing trend, cash calls are consistently about 400% more than cash distributions, in other words if you committed 500k for a "deal", if you watch the cash calls and cash distributions I have seen this worrying trend, when it comes to cash calls they will ask for 400% more than what their cash distributions will be.
This trend 1) incentivizes the firm to profit by forfeiting the investors prior cash deposits if the investor cant fill the cash call. (make a 2500$ distribution in november then hit him with a 12k cash call in december). 2) allows the firm to be less competent with their investing performance, its much easier to pay a small distribution while collecting a 400% larger cash call.
1.2K
Comments
Comment