Charlie Eaton, founder of placement agency CP Eaton, says he sees a recurring issue in many of the general partners who come through his door seeking fundraising assistance. Too many, he says, hoard the economics of the firms they founded. This harms the esprit de corps at the firms and also causes some limited partners to think twice about committing.
“Don’t be greedy and share the wealth. Enough’s enough,” he says from the Connecticut headquarters of CP Eaton. “There are a lot of greedy people in the investment world, and some never seem to have enough. It’s detrimental to the future of their firms if they have that attitude. LPs are very sensitive to how broad the ownership is within the GPs they’re thinking of investing with.”
Eaton practices what he preaches. Having started CP Eaton 26 years ago as the sole employee and 100 percent owner, Eaton has grown the firm into a global fundraising specialist with plans for 45 professionals by year end. He now owns less than 20 percent of his namesake business, which has 11 partners.
Last summer, he expanded the economics of the firm further by instituting a revenue share plan for vice presidents and senior vice presidents.
Opening up the ownership structure of the firm you founded can be difficult, but doesn’t necessarily mean a decrease in wealth. “It’s dilutive to the partners, but we look at it as accretive to the firm,” says Eaton. “We expect the business to grow significantly as a result of those additions.”
The latest addition to the CP Eaton partnership is Loren Boston, the former head of Merrill Lynch’s placement business and before that, of Citi’s placement business. Boston, who will oversee the firm’s private equity products, says he was attracted to working at an independent firm that has a “true partnership structure”.
Boston will sit on CP Eaton’s six-person management committee, which includes Eaton, the heads of the firm’s hedge fund, infrastructure and real estate “silos”, as well as the heads of the European and Asian operations.