Trilantic Capital Partners Europe, the transatlantic private equity team spun out of Lehman Brothers Merchant Banking in 2009 following the firm's collapse, believes 2013 will be a pivotal year for private equity, because the asset class historically provides the best returns in the wake of a financial crisis.
Critical to any engagement is working with existing management. “This is ultimately a people business,” says Pignatti. “In public markets you buy the company, an asset. In private markets, you buy the people, and you have to ensure you can keep them while you grow the company.”
Trilantic Europe assigns a dedicated team to work with each portfolio company, enhancing financial reporting, strategic planning and risk management practices as well as implementing incentive structures for senior management and other key employees.
A Global Advisory Board, Europe Advisory Council and operating partners help source and evaluate new investment opportunities and act as an additional resource for the portfolio companies.
Pignatti says Europe presents a wealth of opportunities, but governments and institutional investors should embrace private equity as the best sort of long-term capital. “Countries have different rules, but the end goal of most of them is to try to build a long-term investment base. We do think investors welcome private equity, but some have restrictions on investing.”
He believes private capital commitment is strongest, representing true risk capital. “Investors’ desire to get a blended 7% return is equal or greater than ours is to engage them in private equity,” he says.
Adjustments to fee structures to reflect changing markets, but these are a “change to the commercial terms, not the philosophy” of the industry.
“We understand risk and return criteria. We are a ‘sleep-well-at-night’ fund, with no more than 15% committed to any single deal. And we would not risk outperformance on any single investment.”