A private equity firm’s exposure to risk is rather unique compared to other industries. In addition to continually reviewing your own in house operations, you must also be cognizant of the exposures and changing needs of your portfolio companies. This unique dynamic creates the need for a multifaceted risk management strategies. Accordingly, it emphasizes the need to partner with an insurance broker who has the knowledge to understand your operations and the ability to provide a proper risk management and insurance solutions to protect both you and your investments.
Your investment portfolio inherently includes an array of exposures to risk, ranging from a technology firm’s multi million dollar E & O liability exposure to a multi-national manufacturer’s supply chain business interruption potential. Depending on your investment focus, these risks can be easily identified, or can be deeply recessed within the subparagraph of an operating agreement. Regardless, you must be able to rely on an insurance partner that is willing to take the time to work with you to assess each unique set of exposures embedded within your investments.
Central to these exposures and unique for private equity firms is management liability. Your fiduciary responsibilities to both the firm itself and third parties are constantly in motion. Disputes can ignite if investors perceive that their expectations are not being fulfilled or if investment practices have the appearance of irregularity. Indemnity requirements lurk within contracts with investors, partnerships, and portfolio companies, and each can profoundly affect your security and assets. PE executives serving as a director or officer of an outside entity may have fiduciary responsibilities to the portfolio company that may be in direct conflict with the interest of the PE firm. This is illustrative of how a single incident can touch the PE firm, the portfolio company, and the executives themselves on a personal level.
Thomas Gregory Associates has the expertise to not only meet your immediate needs, but also to monitor and react to those needs developing on the horizon. “Creative Solutions to Complex Problems” has long been the TGA mantra which is precisely what makes TGA the right solution for private equity firms.