"Succession is one of the things where private equity is ahead of hedge funds," said Daniel Celeghin, a partner at Casey, Quirk & Associates LLC in Darien, Conn., which advises asset-management firms. "They have an advantage because the nature of their businesses is more collaborative.Decision-making is shared among teams."
For succession to work at hedge funds, the founders must delegate responsibilities, communicate that to investors and ensure those with added responsibilities are more visible as well as recognized for their contributions, according to Eric Weinstein, who runs the $4 billion fund-of-hedge-funds business at Neuberger Berman Group LLC in New York.
"This must happen incrementally over a period of years or investors will take their money out following a change of control that can be viewed as sudden," he said.