Arguably the most important business deal that an asset manager will negotiate is with its business partners (i.e., its co‑founders and fellow principals) – those it relies on for complementary skill sets and the fortitude to build its business over time. Just as the dynamics among founders take many forms, so do the conflicts that arise between them over the long and challenging course of managing a business. To ensure the principals and their firm navigate those challenges appropriately, asset managers should thoughtfully document their business arrangements early in the relationship.

This first article in a two-part series identifies the unique challenges inherent in bespoke and personal business arrangements, with particular attention paid to important governance and economic considerations to address in those arrangements. The second article will address restrictive covenants, departure scenarios and buy/sell arrangements, in each case, viewed through the lens of a founder or principal.

See Part Two of this series.

Click here to view the full article