News & Events

Funds Partner Peter Gilman was quoted in a Private Equity Law Report article titled, “The Growth of Preferred Equity: Features of the Hybrid Debt/Equity Solution and Its Use for Fund Level Liquidity (Part One of Two).” The article was part of a series focusing on preferred equity and considerations for fund-level issuances for LP liquidity, follow-on acquisitions and rescue capital for struggling portfolio companies. It examined the features of preferred equity, and touched on the structure of preferred equity, fund-level applications, and the important alignment between existing LPs, preferred equity investors and GPs, among other topics.

When discussing how preferred equity is a hybrid of debt and equity, Peter noted that, as a liquidity solution, preferred equity is less beholden to valuations than debt financing because it is not secured by the underlying asset. He further explained that preferred equity is also more flexible than a secured debt instrument but has the potential to give rise to conflicts of interest given the creation of different classes of equity holders through the issuance of a preferred instrument. 

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