BizNexus Roundup

Agency Risk in the Lower Middle Market: A Guide for PE Professionals

BizNexus Episode 49

This CFA Institute article examines agency risk in lower middle market private equity (PE) deals. Agency risk arises from conflicts of interest, primarily involving underqualified business brokers who often act as both marketers and financial/legal advisors to inexperienced sellers.

The article highlights three key sub-categories of this risk: anchoring, bad advice, and telephone negotiations. Mitigation strategies are proposed, emphasizing open communication with brokers, encouraging sellers to seek professional counsel, and negotiating directly with principals. The ultimate goal is to facilitate smoother transactions by addressing the inherent challenges of this specific PE market segment.

Access the full report here:
https://blogs.cfainstitute.org/investor/2024/12/09/agency-risk-in-the-lower-middle-market-a-guide-for-pe-professionals/

DISCLAIMER: The BizNexus Roundup podcast features AI hosts whose analysis is based entirely on pattern recognition and reports created by actual human experts. While our hosts can process vast amounts of data, they've never actually closed a deal or sat in a boardroom.

Our discussions draw from publicly available sources and expert insights, but we strongly encourage listeners to consult the original documents and reports referenced in each episode for the complete context and analysis. The AI hosts' market predictions and deal assessments, while data-driven, are no substitute for professional human judgment and due diligence.

For actual M&A advice, please consult qualified human experts and always go to the source materials to get the full story.


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Show Credits

Intro Music Artist: DJ Freedem | Track: Pretty Boy