The document discusses the suitability of permanent capital structures for investment funds, addressing the evolution of capital formation, investment strategies, and the frustrations with traditional fund-raising methods. It highlights the significant growth of yield vehicles such as BDCS, MLPs, and REITs over the last decade, as well as the advantages of permanent capital, including lower costs and avoidance of serial fundraising. Additionally, it covers various legal, tax, and valuation issues associated with these structures while offering insights from industry experts.

1. Panel Discussion
Is Permanent Capital Structure
Right for Your Fund?
July 21, 2015

2. Is Permanent Capital Structure Right for
Your Fund?
July 21, 2015
Introduction
• Historically, permanent capital vehicles were niche
• Very distinct strategies and requirements with attractive alternatives
• Capital formation activities are evolving quickly
• Diversified investment strategies
• Asset managers seeking opportunities in non-core areas
• Frustration over serial fund-raising process
• Fee pressure and the need to effectively start over every five years
• Recognition of limitations of traditional models
• Hold periods and the need to harvest the portfolio based on timing rather than economic factors
• Need for differentiation among peers
• Gap between public and private regulation has narrowed
• Desire to have an established portfolio foundation
• Goal perspective rather than structure perspective
• Focusing on goals and objectives and working back to structure is preferable
• Structure focus is limited:
• Advisors typically deeply channeled in particular structure
• The inertia of precedent impedes the progress of evolution
• Being structure-agnostic allows for broadest consideration of best alternatives for a particular investment strategy
or focus
2

3. 3
• Yield vehicles, specifically BDCs, MLPs, and REITs, have
seen substantial growth over the last decade
• The BDC market has grown from an aggregate of $8.7 billion in
market cap in 2004 to $33.0 billion in 2014
• The REIT market has grown from an aggregate of $307.9 billion
in market cap in 2004 to $907.4 billion in 2014
• The MLP market has grown from an aggregate of $36.9 billion in
market cap in 2004 to $528.0 billion in 2015
• Alternative asset managers and SPACs have also seen
significant growth over the last decade
REIT Industry Growth ($MM) (1) MLP Industry Growth ($MM) (3)
BDC Industry Growth ($MM) (1)
1) Source: SNL Financial 2) Source: NAREIT 3) Source: NAPTP
Industry Growth: BDCs, REITs, & MLPs
4
Alt. Asset Manager/PTP Industry Growth ($MM) (1) Closed End Fund Growth ($MM) (2)
SPAC Growth & Capital Raised ($MM) (3)
SPAC Summary ($MM) (3)
1) Source: FactSet. Alternative Asset Managers & PTPs Include: APO, ARES, BX, CG, CODI, FIG, KKR, MIC, OAK, & OZM
2) Source: Investment Company Institute
3) Source: SPAC Analytics; SPAC summary includes all 222 SPACs raised since 2003
Industry Growth: Alt. Asset Managers, CEFs & SPACs

4. Why Permanent Capital?
• Longer Hold Period / Investment Horizon
• Access to Growing Capital Pools
• Lower Cost of Capital
• Ability to Avoid Serial Fund Formation / Raising
• Gap Between Public / Private has Shrunk
• Diversified Institutional and New Retail Investor Base
• Exit Platform for Existing Portfolio
• Liquidity without Redemption for Investors
• No Financing Contingencies for Transactions
• Recognized Public Buyer with Audited Financials
• Regulated SARBOX Compliance
• Management Compensation Options
5
Overview of Structures
• ’40 Act Structures
• Closed-End Fund
• Interval Fund
• Business Development Company
• Non-’40 Act Structures
• Real Estate Investment Trust
• Master Limited Partnership
• Permanent Capital Acquisition Partnership
• Special Purpose Acquisition Company
• YieldCo
• Compare Other Structures
• Hybrid Structures
• Public Asset Manager
• Offshore Vehicles
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5. Marketing Issues
• Asset / Portfolio Composition
• Portfolio Size for IPO
• Management Team / Track Record
• Board Composition
• Distribution Requirements
• Investor Base
• Use of Proceeds
• Line of Credit Terms at IPO
• Leverage Pre-Post-IPO
• Management and Incentive Fee
• Diversification of Investment Strategy
• Differentiation Among Permanent Capital Vehicles and Other Alternatives
• Manager Skin in the Game
7
8
Stand-Alone
Return
Cumulative
Expected Return (1)
10-Year Treasury (Risk-Free Rate) (2) 2.22% 2.22%
Bond Premiums(B to CCC) 2.5% -5.0% 5.0%-7.5%
Equity Premium 3.0% -4.0% 8.0% -11.5%
Illiquidity Premium (Private Equity) 5.0% -6.0% 20.0% -30.0%
BDC Industry Yield / Total Returns 10.5% (3) 10.0% –15.0%
CODI Yield / Total Returns 8.7% (4) 20.0%-30.0%
Alternative Asset Manager Yield / Total
Returns
6.4% (5) 15.0% -20.0%
MLP Industry Yield / Total Returns 6.3% (6) 10.0% -15.0%
REIT Industry Yield / Total Returns 3.8% (7) 10.0% –15.0%
1) Includes yield plus expected capital appreciation
2) Source: U.S. Department of the Treasury
3) Represents average yield of the BDC index
4) Source: FactSet
5) Source: SNL Financial
6) AlerianMLP Index
7) SNL US REIT Index
Note: Total return values over one year
BDC Index includes ABDC, ACSF, AINV, ARCC, BKCC, CMFN,
CPTA, FDUS, FSC, FSIC, FSFR, FULL, GAIN, GARS, GBDC,
GLAD, GSBD, HCAP, HRZN, HTGC, KCAP, MAIN, MCC,
MCGC, MRCC, NMFC, OFS, OHAI, PFLT, PNNT, PSEC, SAR,
SCM, SLRC, SUNS, TCAP, TCPC, TCRD, TICC, TPVG, TSLX,
and WHF
Alternative Asset Managers Include: APO, ARES, BX, CG, FIG,
KKR, OAK, and OZM
Investor Return Expectations, Industry Yields, and Cumulative Expected Returns
Investor Expectations

6. Legal Issues
• Corporate form will be driven by:
• Investment strategy and structure chosen
• Public / private nature of structure
• Certain structures and structural elements can be highly flexible
• ’40 Act Requirements Generally
• Investment securities
• Joint transaction / co-investment restrictions
• Compensation requirements
• Mark to market
• Management and Compensation Structure
• Internal versus external
• Performance fee
• Management fee
• Equity participation
• SEC Process
• Tax Requirements
• 1099 versus K-1
• 7704 qualifications
• Distribution requirements for BDCs and REITs
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Tax and Accounting Issues
• Tax Issues
• K-1 versus 1099
• Corporation versus Partnership
• Accounting Issues
• Treatment of Contingent Obligations / Performance Fee
• Financial Statements
• Jobs Act Considerations
• Acquisitions
• AICPA / PCAOB Audits
• Time Periods
• Pro Forma Presentations
• Pushdown Accounting
• Non-Controlling Interests
• Predecessor / Successor Auditor
• Principal Auditor
• PCAOB Registered
• Consents
• Independence
10

7. Valuation Issues
• Valuation Needs:
• Provide Investor / Shareholder Confidence
• Support Fiduciary Obligations of Board
• ’40 Act Structures
• Quarterly Mark-to-Market Valuation
• Other Situations
• Related Party Transactions
• M&A Valuation Services
11
Take-Away Considerations
• Investment Strategy
• Debt or Equity
• Domestic or International
• Diversified or Industry Vertical
• Minority or Control Positions
• Management Structure
• Internal or External
• Management Fee Expectations
• Incentive Compensation
• Equity or Performance Fee and Aligning Interests
• Investor Objectives
• Distributions or Growth-Oriented
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8. Biographies

9. Bob Bartell is a Managing Director and Global Head of the D&P Corporate Finance unit and
CEO of the Duff & Phelps Securities, LLC FINRA registered broker/dealer entity. Prior to
becoming head of corporate finance, Bob managed the firm’s Fairness & Solvency Opinions
practice and founded the firm’s first PE Financial Sponsor Coverage (FSG) team. Bob joined
Duff & Phelps in 1997.
Bob Bartell, CFA
Global Head of Corporate Finance
Duff & Phelps Securities, LLC
+1 (312) 697-4654
Bob.Bartell@duffandphelps.com

10. Mr. Booth oversees all industry groups in Investment Banking and plays an active role in
managing the Financial Institutions and Real Estate Groups. Prior to being Co-Head of
Investment Banking, Mr. Booth was Head of the Financial Institutions Group and Real Estate
Group at Janney Montgomery Scott.
Prior to joining Janney in 2008, Mr. Booth was Head of the Financial Institutions Investment
Banking Group at Ferris, Baker Watts, Inc., where he built a specialty finance practice and
managed over $11 billion of capital transactions for his clients. Prior to Ferris, Baker Watts, Inc.,
Mr. Booth worked in the Real Estate Investment Banking Group of First Union Securities (now
Wells Fargo Securities). Mr. Booth has executed over 100 capital markets and mergers and
acquisition transactions in the Financial Institutions area over his career.
Mr. Booth received a B.S. in finance from Syracuse University and an M.S. in finance from The
George Washington University.
Cliff Booth
Co-Head of Investment Banking
Janney Montgomery Scott LLC
+1 (410) 583-5992
cbooth@janney.com

11. Jay Gould is a corporate partner in the firm’s San Francisco and New York offices and serves
as co-chair of the firm's financial services corporate practice group. Jay concentrates his
practice on investment funds and investment management. He counsels clients involved in all
aspects of the financial services industry. Jay represents U.S. registered investment companies,
hedge funds, offshore investment companies, investment advisers, retail and institutional
broker-dealers, and municipal bond underwriters. Jay has extensive experience in drafting
private placement memoranda, partnership and limited liability company agreements,
subscription agreements, registration statements, proxy statements, periodic reports, no-action
letters, applications for exemptive relief, and other documents for filing with the SEC, FINRA,
and other regulatory agencies.
Jay advises investment companies, investment advisers, and broker-dealers on mergers and
acquisitions. He also provides counsel on matters involving corporate governance and
Sarbanes-Oxley compliance, mortgage securitizations and sales, collateralized debt offers, joint
ventures and strategic relations, and retail, institutional, and offshore securities distribution
strategies and regulatory considerations.
Prior to joining the firm, Jay served as Chief Counsel for E*TRADE Global Asset Management,
Inc., Vice President with TransAmerica Life Companies, Senior Counsel to Bank of America
NT&SA, and as an attorney with the Securities and Exchange Commission and four other major
international law firms.
Jay received his B.A. from the University of Washington in 1978 and his J.D. from The Catholic
University of America, Columbus School of Law in 1983.
Jay Gould
Co-Chair, Financial Services Corporate Practice
Winston & Strawn LLP
+1 (212) 294-9575 (New York)
+1 (415) 591-1575 (San Francisco)
jgould@winston.com

12. Mary is the National Professional Practice Director for the Northeast Region of Grant Thornton.
In this role, Mary deals with all professional standards, auditing and risk management issues
pertaining to clients in the Northeast Region. She also consults with businesses throughout the
country on complex accounting and auditing matters including business combinations, IPO’s,
revenue recognition, equity instruments and long-lived assets.
Prior to taking on the NPPD role, she was a lead engagement partner servicing commercial
clients. She worked with both private and public companies, many with a significant presence
outside the US. She has also worked with numerous clients to raise capital through IPO and
debt offerings; in addition, she has assisted clients with significant acquisitions and divestitures
throughout her entire career. Mary has served some of the firm’s largest and most strategic
clients. Mary has held numerous leadership positions within the New York office and the firm
including: NYO Assistant Managing Partner responsible for Quality, People and Client service,
CIP Industry Leader, member of the National Audit Leadership Team, and member of various
firm task forces, including the partner compensation task force and the first audit improvement
task force.
Mary Ropes
Partner, National Professional Practice Director
Grant Thornton LLP
+1 (212) 542-9630
mary.ropes@us.gt.com

13. Mr. Swanson joined The Compass Group in 2001. Prior to that, Mr. Swanson was with Goldman
Sachs. Mr. Swanson is a graduate of the University of Chicago and the Harvard Business
School. Mr. Swanson is currently a director and the Chairman of Arnold Magnetic Technologies
Corporation. Mr. Swanson also currently serves as a director for of a number of other
companies, including American Furniture Manufacturing, Inc., CamelBak Products, LLC and
Liberty Safe and Security Products, Inc.
Dave Swanson
Partner
The Compass Group
+1 (203) 221-1703
DSwanson@compassequity.com

14. Chris Zochowski is a general corporate practitioner that works extensively with both domestic and
international clients with respect to:
• Mergers and acquisitions, including asset transactions, segment dispositions, reincorporation
mergers, proxy solicitations and issuer self-tender offers.
• Public and private securities transactions, including initial, follow-on and secondary public
offerings, shelf registrations, transactions for business development companies, special
purpose acquisition companies and permanent capital structures, 144A and Reg S
transactions, public debt offerings and offerings under medium-term note programs.
• Specialty finance transactions, including permanent capital transactions involving Business
Development Companies, Permanent Capital Acquisition Partnerships, Master Limited
Partnerships, REITs, Special Purpose Acquisition Companies, and a variety of both public
and private hybrid structures involving long-term or other permanent capital.
• Cross-border and domestic project and structured finance transactions involving a wide
range of energy technologies.
• Debt restructurings, including consent solicitations and exchange offerings.
Chris has worked across a wide range of practice areas and industries. He also has extensive
experience in structuring and negotiating transactions on behalf of private equity and asset
management clients, as well as in structuring and negotiating specialty finance transactions for
sponsors in the public markets. In addition, Chris has advised clients on matters relating to periodic
reporting and disclosure requirements under the Securities Exchange Act of 1934, compliance with
the rules and regulations of the New York Stock Exchange, Nasdaq, the American Stock Exchange
and the NASD, compliance with the Public Company Accounting Reform and Investor Protection Act
(i.e. the Sarbanes-Oxley Act), Delaware corporate law matters and other general corporate matters.
Chris received his B.A. from Georgetown University in 1993 and his J.D., with highest honors, from
The George Washington University Law School in 1997 where he was a member of the Order of the
Coif. While in law school, Chris was the Notes Editor of the George Washington Law Review.
Honors & Awards
• Chambers USA, Corporate/M&A & Private Equity - District of Columbia (2015)
• M&A Advisor 2013 Corporate/Strategic Acquisition of the Year ($100M - $1B)
• M&A Advisor 2012 Corporate/Strategic Acquisition of the Year ($100M - $200M)
Chris Zochowski
Chair, Permanent Capital Solutions Practice
Co-Chair, Mergers & Acquisitions/Securities/Corporate
Governance Practice
Winston & Strawn LLP
+1 (202) 282-5780
czochowski@winston.com