Private Equity and Marriage

Some of you might be thinking this guy has gone mad, what is the remotest relationship between the two subjects - Private Equity ("PE"), an investment discipline meant for so-called wizards of the financial world and Marriage, a process of tying two souls together for a lifetime (Mind it, this is just for public display, I know that Marriage is an irreversible (for most cases) binding contract by which a person enters into quarreling, cribbing and bickering for a lifetime.)

But, I being in the midst of both these subjects simultaneously, could not help but notice a close resemblance between the two.

In PE, after initial discussions and meetings (which is similar to pre-engagement meetings between the two sides in a marriage), people sign a non-binding Term Sheet which usually has a no-shop clause stating that the Company would not meet any other potential investor until the time this process comes to a successful or unsuccessful end. In marriage, we have something very similar, which some people refer to as Engagement (or roka or sagai in some parts of the country) - post which people agree not to meet other potential brides (or grooms) - the no-shop clause of marriage contract.

Post term sheet, PE investors conduct due diligence on the Company. In marriage, there is a two-way diligence process during the courtship period in which both the parties try to understand each other better (and possibly prepare themselves for a lifetime of quarreling and bickering :P).

On completion of diligence, PE investors sign binding definitive agreements and transfer the money. Once money is gone, the investor is married to the Company. In marriage, you do the wedding ceremony in place of definitive agreements.

Unlike the engagement which is non-binding (yes, people can break engagements without going to a court of law just like investors can walk out of the deal post term sheet), marriage is legally binding post wedding (That means,you are stuck out here for rest of this life, hence better behave).

PE process differs from the marriage one in one significant aspect - Exit Clause. PE agreements generally have a well-defined exit clause for all possible future scenarios(though truly speaking, things always turn out better or worse in future but never exactly the same as envisaged), it is a blasphemy to talk of exit during marriage.

Thus, PE and marriage are similar to each other in a number of aspects. I sincerely hope that I have a long, successful and happy inning in both PE as well as marriage.