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VCGuy
Believe me, it’s not... • 3m
I came across an interesting PE business model by Cranemere Group. They operate similarly to a 'mini-Berkshire Hathaway'. Traditional Private Equity (PE) Model i). Closed-end funds with a fixed lifespan (~10 years) ii). Limited partners (LPs) have minimal involvement in operations iii). Exits/Payouts occur through trade sales, secondary buyouts, or IPOs Downsides of Traditional PE - Premature Exits : Firms may need to sell investments before realizing their full potential. - Limited Liquidity : Investors cannot access payouts unless a part or all of the business is sold. - Dependence on Market Conditions : Exits through sales, buyouts, or IPOs may not always be well-timed. Cranemere’s Alternative Model a). No LP/GP Structure → Investors receive shares in Cranemere (Hold Co.), which then invests in companies. (stock value is reassessed annually based on investment performance) b). Liquidity Managed at Cranemere Level → Investors can either stay invested or choose to take a payout. c). Active Shareholder Role → Investors receive board representation, and quarterly business meetings are held. If you build and own a great business, why sell it?
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