Weil partner Simon Saitowitz talks market shifts, secondaries and the qualities that define future lawyers
Ahead of Legal Cheek’s ‘Inside private equity’ virtual student event this afternoon, Weil partner Simon Saitowitz sat down with Legal Cheek Careers to demystify a corner of the private equity market that’s booming but still confusing to many students: secondaries.
Saitowitz’s path to partnership has come full circle. He joined Weil as a trainee in 2006, qualified in 2008, and went on to spend around a decade focusing primarily on mainstream private equity transactions for Weil’s biggest private equity clients. At some point during that period, he began exploring a niche that few were watching at the time: secondaries. “I saw it as a major growth area” he recalls, noting that the firm was then “only dipping its toe into the secondaries market.” The secondaries market is an evolutionary area of private equity and refers to the buying and selling of existing interests in private equity funds to provide investors with liquidity.
Simon later moved to another US private equity outfit in London, to help build their European secondaries practice where he rose to partner while developing his expertise in the secondaries space. A later move to a second leading US firm followed, prompted by a connection he had made early in his career, and saw him help establish that firm’s secondaries presence in the City working on some of the most high profile secondaries transactions in the market.
Having built a reputation as one of the leading lawyers in London for private equity secondaries deals, the “stars aligned” and Saitowitz returned to Weil this year to continue his trajectory as part of Weil’s premier global private capital platform. “Weil is such a brilliant firm — there is no other firm on the planet that can parallel Weil’s phenomenal culture of excellence, mutual respect and collaboration,” he says. For him, the decision to return was an easy one. Simon is one of many ‘boomerang laterals’ meaning partners who have returned to Weil.
For students new to private equity, Saitowitz starts with the basics. “In short, private equity involves raising money from private investors, typically pension funds, insurance companies, and other investors such as sovereign wealth funds” A fund manager sets up a fund, raises commitments from these investors, and then invests that money over time by acquiring businesses. But unlike buying a public share, the commitment and the cash is tied up: “these investments are locked up typically for 10 or so years.” Capital is drawn gradually, so you might commit £100 million and see only £1 million called in year one, with more drawn later. That mix of illiquidity and ongoing cash calls “can be challenging to manage for some investors particularly as you get later in that time horizon, a lot can change in 10 years. And so a lot of investors want optionality to get out.”
This is where ‘secondaries’ come in — Saitowitz’s specialism. Secondary transactions give investors a way to cash out earlier. Specialist funds step in to buy these “second-hand” interests, taking on both the risk and the potential upside in return for paying selling investors upfront.
The mechanics are more involved than selling a share on an app. “It’s not the same as say selling a stock listed on the London Stock Exchange.” Pricing can be tricky, risks vary by fund, and deals are often done at scale. Imagine a big pension fund selling stakes across dozens of funds in one go. “Think about how difficult it is to analyse a hundred of these interests. It’s not comparable to buying one business. You’re analysing each fund, the manager and then all of the portfolio companies that that fund has invested in.” Unsurprisingly, this is highly specialist territory. There are “around 50 or so” sizeable secondary funds with more than a billion dollars to deploy, and they are the type of clients Saitowitz most frequently acts for.
The secondaries market has also evolved beyond the traditional buying and selling of interests in private equity funds. Other structures that deliver liquidity to locked in investors are now becoming more mainstream, for example, GP-led continuation funds. Saitowitz’s practice is very active in the continuation fund space. In these deals, the general partner (GP) — the manager of the private equity fund — will transfer one or more portfolio companies from an existing fund to a new fund managed by the same manager. The manger then gives existing investors a choice: sell their stake for cash or roll it into a new vehicle. This structure allows the GP to hold on to and further develop prized assets. As Saitowitz explains, “The fund manager sets up a new fund backed by new investors. These new investors are typically specialised secondaries investors. One or a small group of these investors will be designated as Lead Investors and they will negotiate the transaction and underwrite the deal. The capital provided by these new investors is then used to purchase one or more assets from the existing selling fund. The selling fund distributes the proceeds to its limited partners, while those who want to remain invested can roll their interests into the new fund.”
This avoids a forced sale at the wrong time. “Rather than selling at a suboptimal price, you can hold the asset for another five years, invest more capital, enhance its value, and ultimately sell at a better price,” he notes. The model benefits both sides: the manager retains control of an asset it knows well, while investors can choose liquidity or continued exposure. Unsurprisingly, GP-leds have become “a very popular tool for GPs,” Saitowitz adds, with “around 80% of the top 100 GPs” having completed at least one.
Having started out when private equity still felt niche, Saitowitz is part of a generation that has been instrumental in reshaping private equity. “When I started in 2006, private equity was still comparatively new in London and it was the large global banking relationships and capital markets work that formed the engine of most corporate law firms in the city,” he says. Where public markets once dominated, “it’s now private capital and firms like Weil which was one of the earliest pioneers in the private equity legal space are leading the charge.” Looking ahead, he expects niches to continue emerging alongside mainstream buyouts. “Secondaries is the obvious one,” he says, predicting the market will grow “significantly, really exponentially over the next 10 years.” Adjacent areas such as infrastructure and private credit are also “growing at a reasonable pace along with the broader private equity market.”
Macroeconomic conditions inevitably shape Saitowitz’s practice, but he notes that secondaries often thrive in times of volatility. “We don’t dislike volatility because it creates opportunities,” he says, explaining the “denominator effect.” as an example. When public markets fall, private assets can suddenly make up too much of an institution’s portfolio under its investment mandate. “Some of these large pension funds have limited choice but to sell down portfolios to reduce their exposure to private assets.” Interest rates also play a crucial role. Leverage, he explains, is “one of the key hallmarks of private equity,” and rising rates have been “uncomfortable for private equity investors because their returns naturally are just going to be lower.” With rates now coming down, however, conditions are improving for PE investors who are eager to put their dry powder to work.
London and New York, which houses Weil’s headquarters, meanwhile, is central to Weil’s strategy because that is where the clients are. “If you look at private capital, New York and London are essentially the two epicentres of activity,” Saitowitz says. As one of the world’s leading financial centres, and particularly strong in private capital, London is a natural base. “It’s a strategic priority to be following where the clients are geographically”.
After nearly two decades in practice, what keeps him engaged is straightforward: “I really enjoy doing deals. It’s fast paced and exciting.” Having the support and the opportunity to work closely with “the best lawyers in the market” also makes the work collaborative, fun and deeply rewarding.
For aspiring lawyers hoping to make their mark in private equity, Saitowitz offers his “three i’s”: integrity, intensity and intelligence. Integrity is foundational: “being a good person, treating your colleagues with respect, being honest, and doing to others as you want done to yourself.” Intensity is about work ethic. “You’ve got to do everything at 100%. If you can be fully committed to every task you undertake and apply the highest level of effort at all times you’ll be successful” Intelligence, the third pillar, does not mean brilliance but capability: “You don’t have to be a genius, but you have to have the right kind of intelligence to handle relatively complicated fact patterns, and the ability to apply your intellect thoughtfully — not just going through the motions but really thinking about what you are doing”. Put together, he says, “you will be absolute winners.”
Simon Saitowitz will be speaking at ‘Inside private equity — with Weil’, a virtual student event taking place THIS AFTERNOON, Monday 15 September. Apply for one of the final few places.
