How are conflicts of interest managed in secondary transactions?

Managing conflicts of interest in secondary transactions is essential to ensure fairness and maintain investor confidence. The approach of utilizing independent valuation and involving the Limited Partner Advisory Committee (LPAC) is crucial in this context.

Independent valuation plays a key role by providing an objective measure of the assets or interests being bought or sold, which helps to ensure that all parties involved are negotiating based on fair market values rather than subjective assessments that could be influenced by conflicting interests. This independent assessment acts as a safeguard against potential bias that the parties directly involved in the transaction might have.

Additionally, the involvement of an LPAC is significant as it typically includes representatives of limited partners who have a vested interest in the outcomes of transactions. The LPAC's input can help oversee the sale process and ensure that all limited partner interests are adequately represented and protected, providing a layer of governance that can alleviate some concerns regarding potential conflicts of interest.

In contrast, limiting transparency in negotiations would exacerbate conflicts rather than help manage them. Increasing management oversight could help, but without the independent and neutral valuation and active participation of LPAC, it may not address conflicts of interest effectively. Excluding limited partners from decision-making processes could lead to a lack of trust and diminish the fairness perceived in the transaction. Thus