Say you’re thinking of going it alone and setting up your own secondaries investment firm – how exactly do you go about it? How do you broach the subject with colleagues? How do you tell your current employer without them freaking out and lawyering up? And most importantly, how do you choose a name for your firm in an era where every combination of rock/stone/river/mountain/sky + Capital Partners is already taken?
These were just some of the questions we put to Carlo Pirzio-Biroli, chief executive and managing partner at Glendower Capital, for an upcoming podcast on how to spin out. Pirzio-Biroli is in a good position to know. In 2017 he and his team spun out of Deutsche Bank to set up Glendower. Three years on and the firm manages close to $6 billion in commitments, has offices in London and New York and is understood to be raising its fifth fund.
The coronavirus pandemic has left many investment professionals wondering whether they could garner better economics by setting up their own funds. However, spinning out successfully can be a tricky business, as sister publication Private Equity International explores in its latest Deep Dive on the topic. And yet, there’s potentially never been a better time to spin out: the economic fallout of the covid-19 crisis will undoubtedly have an adverse effect on some established firms’ portfolios. As the prospect of profit sharing gets pushed further into the future – and in some instances is unlikely to materialise at all – the reason for ambitious executives to hang around is diminished.
Secondaries investment professionals thinking of spinning out are at an advantage to their buyout peers. Many may have themselves backed spin-out processes and thus know the ins and outs of what investors are looking for. And if they’re involved in the GP-led market, they’ll be well-versed in GP-LP alignment.
The usual pitfalls remain, of course: minefields exist around solicitation and poaching staff from your current employer. Stealing clients is also a hairy issue. Having an amicable separation from your existing firm will do wonders in a market where reputation is everything.
But if you make it through all of the above, including the blood, sweat and tears, you could find yourself being your own boss with your own firm and your name on the logo. And who knows, you might even find joy in having to choose office furniture and what colour you want the carpet of your new office to be.
Look out for our podcast with Glendower Capital’s Carlo Pirzio-Biroli next week.
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Glendower Capital declined to comment on fundraising.