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2011 global hedge fund survey - Succession planning - EY - United States

2011 global hedge fund survey: coming of age

Succession planning

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“If we’re not confident with [succession planning] … then we won’t invest with that firm.” Survey respondent

Hedge funds appear to underestimate the importance of a clear succession strategy.

Succession planning is part of the overall process of creating a sustainable franchise to not only to retain, but attract, long-term investors and talented portfolio managers.

Historically, hedge funds have generally relied on the investment prowess of their founding principals to attract and retain capital. As hedge funds mature, they are challenged to institutionalize and facilitate a smooth transition to the next generation of leadership if they are to survive.

Nearly two-thirds of investors say that having a well-articulated succession plan in place is important to their investment decisions. Succession may not be the sole factor driving the decision to invest, but it has become more important.

Yet, it appears this view may not be as widely held by hedge funds, as less than 40% see a well-articulated succession plan as being important to retaining investors.

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