AEA Investors LP, collectively with its affiliates and predecessor companies, has been sponsoring and managing private investment funds and providing investment advice since 1968. AEA Investors LP is a privately held limited partnership controlled by AEA Management LLC, a limited liability company, the managing members of which are John L. Garcia and Brian R. Hoesterey.

AEA Investors LP currently carries out its investment advisory business through the following subsidiaries and/or affiliates: AEA QP Advisers LLC, AEA Advisers LLC, AEA Investors SBF LP1 and AEA Debt Management LP2 (each an “Adviser” and collectively the “Advisers” or “AEA”). This brochure serves as the brochure for all of the Advisers. AEA Advisers LLC, AEA Investors LP and AEA Debt Management LP are all relying advisers with respect to AEA QP Advisers LLC.

The Advisers manage and provide investment advice to closed-end private investment vehicles that are exempt from registration under the Investment Company Act of 1940, as amended and whose securities are not registered under the Securities Act of 1933, as amended (each such vehicle, a “Fund”). The investment advice includes investigating, identifying, and evaluating investment opportunities, structuring, negotiating, monitoring, and managing investments of the Funds and disposing of the investments of the Funds. The Funds invest pursuant to and in accordance with the investment criteria and limitations set forth in each Fund’s governing documents. Other than with respect to the Public Equity Fund (as defined below), the investments generally are not made in publicly traded securities and are commonly referred to as “private equity” or “private debt” investments. The Advisers provide advice to each Fund and do not tailor their advisory services to the individual needs of the investors in each Fund. The Funds (or the general partners thereof) may enter into side letters with certain investors which have the effect of establishing rights under, or altering or supplementing the terms of, the relevant governing documents with respect to such investor. The Advisers’ private equity investment vehicles are focused on the larger middle market (the “AEA Middle Market Private Equity Programs”) and the smaller middle market (the “AEA Small Business Programs” and collectively with the AEA Middle Market Private Equity Programs, the “Private Equity Programs”). The Private Equity Programs focus primarily, but not exclusively, on the following sectors: (1) value-added industrials, (2) consumer and (3) services relating primarily to these and other business sectors. Each of the Private Equity Programs is comprised of one or more Funds.

1 Effective January 1, 2014, AEA Investors SBF LLC converted into a limited partnership, AEA Investors SBF LP. Ownership and control remained unchanged. AEA Investors SBF LP is controlled by John Cozzi, Alan Wilkinson, Baron Carlson, and Tim Whelan, the investment partners who lead the AEA Small Business Programs. 2 Effective January 1, 2015, AEA Mezzanine Management LP merged with and into AEA Middle Market Debt Management LP and the surviving partnership was renamed AEA Debt Management LP. Ownership and control of each of these entities remained unchanged. AEA Debt Management LP is controlled by Joseph D. Carrabino, Jr. and Scott E. Zoellner, the heads of the AEA Debt Programs, and John L. Garcia and Brian R. Hoesterey. - The AEA Middle Market Private Equity Programs are comprised of the following Funds: AEA Investors 2003 Fund L.P. (and its related parallel vehicles) (this program has sold all of its assets and will make its final distribution to investors soon), AEA Investors 2006 Fund L.P. (and its related parallel vehicles), AEA Investors Fund V LP (and its parallel vehicles), AEA Investors Fund VI LP (and its parallel vehicle), and AEA Investors Fund VII LP (and its parallel vehicles). - The AEA Small Business Programs are comprised of the following Funds: AEA Investors Small Business Fund II LP, AEA Investors Small Business Fund III LP, and AEA Investors SBF IV LP.

The Advisers’ private debt funds invest primarily, but not exclusively, in mezzanine debt investments (the “Mezz Funds”) and senior debt investments (the “Senior Debt Funds” and together with the Mezz Funds, the “Debt Funds” or the “AEA Debt Programs”) in non-public companies. Each of the AEA Debt Programs is comprised of one or more Funds.

- The Mezz Funds include AEA Mezzanine Fund II LP (and its parallel vehicle), AEA Mezzanine Fund III LP, and AEA Mezzanine Fund IV LP.

- The Senior Debt Funds include AEA Middle Market Debt Fund III LP and AEA Middle Market Debt Fund IV LP.

In 2017, the Advisers’ commenced an additional investment strategy which invests in public securities, primarily equity. As of March 30, 2020, this strategy, known as AEA Investors Public Equity Fund LP (the “Public Equity Fund” or the “Public Equity Program”) is not open to outside investors. However, the Adviser may at any time open the Public Equity Fund to outside investors, or organize and serve as general partner (or in an analogous capacity) to parallel funds, including parallel managed accounts, created to invest alongside the Public Equity Fund in order for the strategy to be made available to outside investors. The Advisers’ advisory activities consist of investigating, identifying, and evaluating investment opportunities, structuring, negotiating, monitoring, and managing investments of the Funds and disposing of the investments. Such services are provided pursuant to a management agreement with the Funds and/or the organizational documents of the applicable Fund. The Advisers expect in the future to advise other funds in addition to those listed herein. Adviser personnel may also serve on the boards of directors or similar governing bodies of the underlying portfolio company investments of the Funds. See Item 7 for the definition of “Clients,” which, subject to certain limited exceptions, is generally defined as the Funds. The provision of information about the above referenced Funds shall in no event be considered to be an offer of interests in a Fund nor shall it be an offer of, or agreement to provide, advisory services directly to any recipient. Rather, this brochure is designed solely to provide information about AEA for the purpose of compliance with certain obligations under the Investment Advisers Act of 1940, as amended (the “Advisers Act”). Potential investors are provided with relevant organizational documents and private placement memoranda further describing terms, key risks and conflicts associated with a particular Client prior to investing and encouraged to review such documents carefully. As of December 31, 2019, the Advisers had total assets under management (including uncalled capital commitments) of approximately $15,502,446,000 all of which was managed on a discretionary basis. please register to get more info

Fee Schedules
The Advisers’ fees are not negotiable. Prospective investors are advised that there are differences between the fee structures for different products. Advisers are compensated for their advisory services as follows:
AEA Middle Market Private Equity Programs
Funds. Except as set forth below with respect to the Participant Programs, the Clients comprising the Funds of the AEA Middle Market Private Equity Program pay an annual management fee (and investors in the Fund bear those fees indirectly). During the commitment period, the management fee ranges from 1% to 1.75% per annum of a Client’s aggregate non-AEA affiliated commitments, depending on the terms of a particular Fund and the class of interest held. These management fees are waived or offset in certain cases, as described further in “Other Fees and Expenses,” below. After the end of the commitment period, the annual management fee ranges from 1% to 1.5% (depending on the particular Fund and the class of interest held) and is calculated based on funded capital, less capital returned to investors and as adjusted for any permanent write downs in the value of investments. In addition, the profits of the Clients are allocated such that the general partner of the Client is entitled, in addition to its investment interest, to a carried interest. The carried interest ranges from 15% to 20% of the profits of the Fund, assuming that a specified preferred return is achieved. Participant Programs. Certain of the Funds in the AEA Middle Market Private Equity Programs are commitment-based Funds which we refer to as the “Participant Programs.” The investors in the Participant Programs (the “Participants”) pay an annual management fee to the Advisers. During the “commitment period” (the period during which new investments are generally made), the management fee is 1.5% (in the case the oldest remaining Fund) or 1.75% (in the case of later Funds) of each Participant’s commitment. After the end of the commitment period, the management fee continues at the annual rate of 1.5% but is calculated based on funded capital, less capital returned to investors and as adjusted for any permanent write downs in the value of investments. These management fees are generally not subject to offset or waiver. In addition, the profits of the Participant Programs are allocated such that persons associated with the Advisers (AEA personnel) are entitled, in addition to their investment interests, to a carried interest. The carried interest is approximately equal to 10% of distributions on each investment made under the Participant Program; however, the allocation of profits depends on the performance of each particular investment. There is no preferred return hurdle for the Participant Programs. AEA Small Business Private Equity Programs The advisory fees payable by Clients comprising the AEA Small Business Programs consist of an annual 2% management fee (and investors in those programs bear those fees indirectly). These management fees are waived or offset in certain cases, as described further in “Other Fees and Expenses” below. After the end of the commitment period, the management fee is calculated based on funded capital, less capital returned to investors and as adjusted for permanent write downs in the value of investments. In addition, the general partner is entitled to a carried interest equal to 20% of the profits of the relevant fund as described below (assuming that a specified preferred return is achieved). AEA Debt Programs The advisory fees payable by Clients comprising the AEA Debt Programs consist of an annual management fee (and investors in those programs bear those fees indirectly). In addition, the general partner is entitled to a carried interest based on profits if a specified preferred return is achieved. During the commitment period, the management fee is 1% or 1.5% of aggregate non- AEA affiliated commitments (depending on the particular Fund) plus, generally, in the case of the leveraged Funds, the total outstanding amount of the debt facility of that Fund. In certain cases, the fee is reduced or waived, as described further in “Other Fees and Expenses” below. After the end of the commitment period, the management fee is 1% or 1.5% of funded capital depending on the Fund, including in the case of the leveraged Funds, 1% or 1.5% of the average outstanding principal amount of the borrowings of the Fund. In addition, the profits of the Clients are allocated such that the general partner of the Client is entitled, in addition to its investment interest, to a carried interest. The carried interest ranges from 10% to 20% of the profits of the Fund, assuming that a specified preferred return is achieved. AEA Public Equity Program The Public Equity Fund does not yet have a fee schedule.
Affiliated Investors
In general, management fees and carried interest are not payable by Advisers’ or their affiliates’ employees who invest in, or alongside, the Advisers’ investment programs (except in the case of the Participant Programs where, in some cases, employees do pay a carried interest on their invested capital) and are generally referred to as AEA affiliated commitments above. Such investments are generally (but not exclusively) made through the relevant general partner of the Fund. Employees who leave the Advisers or their affiliates generally continue to invest on a no fee, no carry basis after termination of their employment and certain persons who are not employed by the Advisers are invited to invest in the investment programs without paying fees and/or carried interest, including, but not limited to, members of AEA’s global and regional advisory boards or similar advisory relationships and former employees.
Calculation & Deduction of Advisory Fees
In the case of the Private Equity Programs, management fees are generally billed quarterly in advance. In the case of the AEA Debt Programs, management fees are billed semi-annually or quarterly) in advance. In cases where a distribution is expected to be made concurrently with the payment of fees, such fees may be deducted from the funds to be distributed to the Client. With certain limited exceptions, the governing documents of the Funds generally permit the Advisers to waive or agree to reduce a portion of the management fees payable to the extent set forth in such governing documents. In certain circumstances, such waived or reduced portion of the management fee reduces the amount of capital the applicable general partner would otherwise be required to contribute to the relevant Fund (and will be treated as capital contributions made by the relevant general partner). In such event, the non-general partner and non-AEA affiliated investors in the relevant Fund are required to make pro rata contributions according to their respective commitments in lieu of the relevant portion of management fee to fund any contribution that would otherwise be required of the relevant general partner in connection with any such waiver or reduction as described above and, as a result, the exercise of such waiver may result in an acceleration of investor capital contributions.
Other Fees & Expenses
Each Client pays the organizational and startup expenses, including legal, travel, accounting, filing and other organizational expenses of the Fund up to an amount specified in the pertinent offering materials. The Advisers bear the cost (through an offset against its management fee or otherwise) of all organizational expenses in excess of the specified amount (with respect to a particular Client), if any, and of any placement fees payable to any placement agent in connection with the formation of a particular Client. To the maximum extent permitted by the governing documents applicable to such Client, the Client will generally pay, or reimburse its General Partner for, all other fees, costs, expenses, liabilities and obligations relating to the Client, its activities, its business, its portfolio companies, and/or its actual or potential investments, including with respect to any entity formed to effect the acquisition and/or holding of an investment (to the extent not borne or reimbursed by a portfolio company or potential portfolio company), including all fees, costs, expenses, liabilities and obligations relating or attributable to: (i) activities with respect to the identifying, sourcing (including meeting with consultants, broker-dealers, investment banks and other sources of investments), structuring, organizing, negotiating, consummating, financing, refinancing, diligencing (including any subscriptions to any periodicals or databases), acquiring, bidding on, developing, owning, managing, monitoring, operating, holding, hedging, restructuring, trading, taking public or private, selling, valuing, winding up, liquidating, dissolving, or otherwise disposing of, as applicable, actual and potential investments (including follow-on investments) or seeking to do any of the foregoing (including any associated legal, financing, commitment, transaction or other fees and expenses payable to attorneys, accountants, tax professionals, investment bankers, lenders, expert networks, third-party diligence and deal-sourcing software and other subscription services and service providers, consultants (including executive partners, senior advisors and advisory councils) and similar professionals in connection therewith and any fees and expenses related to transactions that may have been offered to co-investors), whether or not any contemplated transaction or project is consummated and whether or not such activities are successful; (ii) indebtedness of, or guarantees made by, a Client, or its General Partner on behalf of a Client (including any credit facility, letter of credit or similar credit support), including the repayment of principal and interest with respect thereto, or seeking to put in place any such indebtedness or guarantee; (iii) financing, commitment, origination and similar fees and expenses; (iv) broker, dealer, finder, underwriting (including both commissions and discounts), loan administration, private placement fees, sales commissions, investment banker, finder and similar services; (v) brokerage, sale, custodial, depository (including a depository appointed pursuant to AIFMD), Swiss representative and paying agent (pursuant to the Swiss Collective Investment Schemes Act (as amended), including any law, rule, or regulation related to the implementation thereof), trustee, record keeping, account and similar services; (vi) legal, accounting, research, auditing, administration (including fees and expenses associated with any third-party administrator and administration, tracking or reporting software, if any), information, appraisal, advisory, valuation (including third-party valuations, appraisals or pricing services), consulting (including consulting and retainer fees, salary and other compensation paid to consultants performing investment initiatives or providing services related to environmental, social and governance investment considerations and policies and other similar consultants), tax and other professional services (including costs associated with any SOC (Service Organization Controls Report) Type I or II control testing and reporting or similar services); (vii) reverse breakup, termination and other similar fees; (viii) insurance (including directors and officers liability, fidelity bond, management liability, cybersecurity, errors and omissions liability, crime coverage and general partnership liability premiums and other insurance and regulatory expenses, including any costs and expenses related to any retention or deductibles and broker fees, costs and commissions) and the cost of any consultants or other advisors utilized in the procurement, review and analysis of insurance policies; (ix) filing, title, transfer, survey, registration and other similar fees and expenses; (x) printing, communications, mailing, and courier; (xi) the preparation, distribution or filing of financial statements or other reports, tax returns, tax estimates, Schedule K-1s or similar forms or other communications with Partners or any other administrative, compliance or regulatory filings or reports (including Form PF and Bureau of Economic Analysis reports) and any administrative, regulatory, reporting, filing, or other compliance requirements (other than the initial registrations, filings, and compliance contemplated by AIFMD), or other information, including fees and costs of any third-party service providers and professionals related to the foregoing; (xii) compliance with any financial account reporting regime, including FATCA and the OECD Standard for Automatic Exchange of Financial Account Information – Common Reporting Standard and any similar laws, rules and regulations, and fees and costs of any third-party service providers and professionals related to the foregoing; (xiii) developing, licensing, implementing, maintaining or upgrading any web portal, extranet tools, computer software (including accounting, investor reporting and ledger systems) or other administrative or reporting tools (including subscription-based services); (xiv) any activities with respect to protecting the confidential or non-public nature of any information or data (including any costs and expenses incurred in connection with compliance with the General Data Protection Regulation (EU 2016/679) (as amended) and any similar laws, rules and regulations); (xv) to the extent provided in a Client’s Partnership Agreement, or otherwise approved by its General Partner in its sole discretion, activities or proceedings of its Advisory Board (including any out-of-pocket costs and expenses incurred by representatives of the Client’s General Partner, the Advisory Board members, permitted observers and other persons in attending or otherwise participating in meetings of the Advisory Board); (xvi) indemnification obligations (including legal and any other fees, costs and expenses incurred in connection with indemnifying any Partner or other person or entity and advancing fees, costs and expenses incurred by any such person or entity in defense or settlement of any claim that may be subject to a right of indemnification pursuant to a Client’s Partnership Agreement), except as otherwise set forth in the applicable Partnership Agreement; (xvii) actual, threatened or otherwise anticipated litigation, mediation, arbitration or other dispute resolution process, including the costs and expenses of any discovery related thereto and any judgment, other award or settlement entered into in connection therewith, except to the extent such expenses or amounts have been determined to be excluded from the indemnification provided for in a Client’s Partnership Agreement; (xviii) any annual Limited Partner meeting or other periodic, if any, meetings of the Limited Partners and any other conference or meeting (including via telephone or webcast) with any Limited Partner(s), in each case to the extent incurred by a Client, its General Partner or any affiliate of its General Partner; (xix) except as otherwise determined by a Client’s General Partner in its sole discretion, any fee, cost, expense, liability or obligation relating to any alternative investment vehicle or its activities, business, portfolio companies or actual or potential investments (to the extent not borne or reimbursed by a portfolio company of such alternative investment vehicle) that would be a Client’s expense if it were incurred in connection with the Client, and any expenses incurred in connection with the formation (to the extent formed after the final closing date of a Client), management, operation, termination, winding up and dissolution of any feeder vehicles related to a Client to the extent not paid by the investors investing in such entities and any other costs and expenses related to any structuring or restructuring of any Client entity; (xx) the termination, liquidation, winding up or dissolution of a Client and any legal entities owned directly or indirectly by a Client, including portfolio companies of a Client; (xxi) except as otherwise provided in a Client’s Partnership Agreement, amendments to, and waivers, consents or approvals pursuant to, the constituent documents of a Client, its General Partner (and its general partner), any entities owned directly or indirectly by a Client (including portfolio companies of a Client) and related entities and any alternative investment vehicle of a Client, including the preparation, distribution and implementation thereof; (xxii) compliance with any law, rule, regulation or policy (including any legal fees, costs and expenses related thereto, any regulatory expenses of a Client’s General Partner (except as set forth in its Partnership Agreement) or any administrator related thereto, compliance with any privacy, data protection, know-your-customer, anti-money laundering (including any validation of any payments made to a Client or its General Partner in connection with any voluntary or compulsory review), sanctions or anti-terrorist laws, rules, regulations, directives or special measure, and compliance with any environmental, social or governance considerations and policies); (xxiii) any litigation or governmental inquiry, investigation or proceeding, including any costs and expenses of discovery related thereto and the amount of any judgments, settlements or fines paid in connection therewith, except to the extent such expenses or amounts have been determined to be excluded from the indemnification provided for in a Client’s Partnership Agreement; (xxiv) unreimbursed costs and expenses incurred in connection with any transfer or proposed transfer contemplated by a Client’s Partnership Agreement or any Limited Partner’s name change or change in registered agent; (xxv) any taxes, fees and other governmental charges levied against a Client and all expenses incurred in connection with any tax audit, inquiry, investigation settlement or review (except to the extent that a Client is reimbursed therefor by a Partner or such tax, fee or charge is treated as having been distributed to the Partners pursuant to a Client’s Partnership Agreement), and any costs and expenses of or related to the “partnership representative” of a Client; (xxvi) distributions to the Partners and other expenses associated with the acquisition, holding and disposition of investments, including extraordinary expenses; (xxvii) subject to a Client’s Partnership Agreement, compliance or regulatory matters, except as otherwise set forth in a Client’s Partnership Agreement, including compliance with a Client’s Partnership Agreement and/or any letter agreement and costs and expenses incurred in connection with the most-favored-nations process; (xxviii) any third-party experts, including independent appraisers engaged by a Client’s General Partner in connection with the Clients’ considering, making, holding or disposing of, directly or indirectly, an investment in the same entity as one or more affiliates of a Client or its General Partner; (xxix) attendance of any member, manager, shareholder, partner, director, officer, employee or affiliate of the Management Company or a Client’s General Partner at any trade conference reasonably related to the investment activities of the Fund and/or its portfolio companies, including any applicable registration fees and exhibition, sponsorship or other presentation fees, costs and expenses; (xxx) any travel (including costs of commercial or private air travel at a cost not exceeding the cost of reasonably comparable first class commercial airfare, car or ride sharing services, and other modes of transportation) lodging, meals or entertainment relating to any of the foregoing, including in connection with consummated and unconsummated investment and disposition opportunities; (xxxi) any Organizational Expenses; (xxxii) any Placement Fees; and (xxxiii) any other fees, costs, expenses, liabilities or obligations approved by a Client’s Advisory Board.

The Advisers or affiliates of the Advisers may receive break-up, transaction and monitoring fees from or with respect to portfolio companies owned by the Clients and, in the case of the AEA Debt Programs, may additionally receive commitment, waiver and consent fees associated with such Funds’ investments. In certain cases, the payment of monitoring fees and other fees in connection with the monitoring agreements (for example consulting fees, transaction / financing fees and termination fees) may be payable or required to be prepaid or accelerated upon the Fund’s exit from a portfolio company or in certain other circumstances, such as an initial public offering or change of control. In the case of the Private Equity Programs, these amounts do not include amounts received by the Advisers (and such excluded amounts are not subject to the offsets described below): (i) as reimbursement for expenses directly related to such portfolio company; (ii) as payment for services not of the type customarily provided by the Advisers to such portfolio company as part of ordinary management services; or (iii) as reimbursement for any secondment or similar fees/salary reimbursements earned in relation to services provided by employees and directors of and those holding similar positions with respect to the Advisers (including operating partners and executives) who are lent to work or provide services on an interim basis to a portfolio company that are reasonable in relation to the services provided. In the case of certain legacy Funds in the AEA Middle Market Program and the Participant Programs, generally out of pocket expenses incurred in connection with transactions not consummated are borne by the Adviser (and such funds do not receive an offset against management fees for the transaction, monitoring and other fees described in the forgoing paragraph). In the case of other Funds managed by the Advisers, these out of pocket expenses are generally borne by the Fund but an amount equal to a designated percentage (which percentage can vary significantly by Fund) of break-up, transaction, monitoring and certain other fees received by the Adviser or its affiliates are applied as an offset against management fees, in each case to the extent such fees are received in respect of the Funds’ investment but excluding amounts attributable to investments by AEA affiliated investors (e.g., general partner). The offset percentages vary from 0% to 100%. Generally, fees received by the Advisers or their affiliates in proportion to investments by co-investors in the portfolio companies (including portfolio company management, other co-investors and financing sources with equity stakes) and fees received by the Advisers or their affiliates in proportion to investments by the Participant Programs in portfolio companies are not offset against Funds’ management fees and are retained by the Advisers.
Prepaid Fees
Clients are required to pay management fees quarterly or semiannually in advance. Clients do not generally receive a refund of fees paid and are generally not permitted to terminate their commitments or withdraw from the Funds.

Compensation for the Sale of Securities
Not applicable. please register to get more info

As described in Item 5, the general partner (or its partners/affiliates) receive a percentage of the profits from the Funds it controls (in some cases assuming that investors receive a specified preferred return), generally referred to as “carried interest.” The fact that the carried interest received by an Adviser’s affiliate is based on a percentage of net profits may create an incentive for the Advisers to cause the Clients to make riskier or more speculative investments than would otherwise be the case. please register to get more info

The Advisers’ “Clients” are defined as (1) the private investment funds (referred to in this brochure as “Funds”) comprising the Private Equity Programs and the Debt Funds and the Public Equity Fund and (2) solely with respect to the Participant Program associated with AEA Investors 2003 Fund L.P., such Participants. Interests in the Clients are privately offered pursuant to applicable exemptions from registration under the Securities Act of 1933, as amended, and the Investment Company Act of 1940, as amended, as well as certain non-US exemptions. The investors in the Funds and the 2003 Participant Program include high net worth individuals and family groups, corporations, insurance companies, foundations, financial and other institutions, charitable organizations, trusts, partnerships, pension funds and limited liability companies. The Advisers refer to certain high net worth individual investors (regardless of the investment program in which they are invested) herein as Participants, but they are only Clients to the extent they are invested in the 2003 Participant Program. Each Client has certain stated minimum commitment amounts (usually $5-10 million) for an investor to be able to invest, however in each case, the Adviser was and is entitled to waive in its sole discretion the required minimum commitment amount and has done so in certain cases. please register to get more info

LOSS
General Description
The Advisers generally invest pursuant to three categories of private investment programs: (1) AEA Middle Market Private Equity Programs; (2) AEA Small Business Private Equity Programs; and (3) AEA Debt Programs. In addition, beginning in 2017, the Advisors sponsored the Public Equity Fund. An investment in each of these investment programs involves substantial risks, including the possibility of partial or total loss of capital. Prospective investors should not make an investment unless they can readily bear the consequences of a complete loss of their investment. The following includes certain of the key investment strategies used by the Advisers in investing pursuant to these programs:

Private Equity Programs. In identifying and analyzing potential middle market and small business private equity investments, the Advisers perform a due diligence review of the business proposed to be acquired, including a study and analysis of the operations and management of the enterprise. Legal and accounting reviews are conducted with the assistance of outside lawyers and accountants, and research is done on the industry involved, including work performed by outside consulting firms. The sources of information vary depending upon the nature of the business and the amount of information publicly and privately available. The strategy is for the Advisers to monitor the acquired company and its operations, seek to provide the services of experienced business executives (who may be Participants or other investors and senior executive staff of Advisers or their affiliates) as members of the board of directors of the acquired company (either at the holding company or operating company level or both), in each case depending on the level of control of the operating company acquired in connection with the investment, and endeavor to cause the acquired company to grow through acquisitions or otherwise, enabling investors ultimately to realize a profit when the investment is harvested. AEA Debt Programs. The AEA Debt Programs generally invest in mezzanine debt securities, senior debt securities and other debt/preferred securities and instruments including ancillary equity and equity related securities. Advisers identify potential investments through diversified deal sourcing channels, including targeted private equity relationships, the private equity activities of the other investment programs, selected public and private “unsponsored” companies, financial intermediaries and by partnering with other debt providers. The Advisers’ due diligence process leading up to making an investment is a staged approach, comprising financial, operational, strategic and legal analysis. After an investment has been made, the Adviser engages in ongoing monitoring by receiving and analyzing financial statements as often as monthly and, in certain circumstances, by participating on a company’s board of directors as either a director or an observer. Public Equity Fund. The Public Equity Fund primarily invests in publically traded securities without seeking or obtaining governance rights and seeks to apply a private equity approach (regarding diligence and long-term holds) to public markets.
Material Risks for Significant Investment Strategies and Particular Types of
Securities
The following includes a description of certain material risks for the three categories of investment programs that the Advisers currently sponsor or manage and for which they provide investment advice. This description is not a complete explanation of the risks associated with these investment strategies or the risks involved in investments made by the Advisers for Clients.
Private Equity Programs
Business Risks. The Private Equity Programs’ investment portfolios will consist primarily of securities issued by privately held companies, and operating results in a specified period will be difficult to predict. Investments such as these involve a high degree of business and financial risk that can result in substantial losses.

Investments in Private Companies. The Funds’ investment portfolio is expected to consist primarily of securities issued by privately held companies, and operating results in a specified period will be difficult to predict. Such investments involve a high degree of business and financial risk that can result in substantial losses.

Future and Past Performance. The performances of the Advisers’ principals’ (the “Principals”) prior investments are not necessarily indicative of the Private Equity Programs’ future results. While the Advisers intend for the Private Equity Programs to make investments that have estimated returns commensurate with the risks undertaken, there can be no assurances that the targeted internal rate of return will be achieved. On any given investment, loss of principal is possible.

Control Investments. The Private Equity Programs, either alone or together with co-investors, is expected to typically hold controlling interests in many of the portfolio companies in which it invests. The exercise of such control by a Fund may result in additional risks of liability for violations of governmental regulations (including securities laws), failure to supervise management or other types of liability in which the general limited liability characteristic of business ownership may be ignored. If these liabilities were to arise, the Fund might suffer significant and material losses. Even when the Fund prevails in any such claims for liability, it may incur significant costs of defending against those claims. Investment in Junior Securities. The equity securities in which the Private Equity Programs will invest may be among the most junior in a portfolio company’s capital structure and, thus, subject to the greatest risk of loss. Generally, there will be no collateral to protect an investment once made. Concentration of Investments. The Private Equity Programs will participate in a limited number of investments and may seek to make several investments in one industry or one industry segment, in a limited geographic area, in a single asset type and/or within a short period of time. As a result, the Private Equity Programs’ investment portfolios could become highly concentrated, and the performance of a few holdings or of a particular industry, or the timing of the investments, may substantially affect their aggregate returns. Furthermore, to the extent that the capital raised is less than the targeted amount, the Private Equity Programs may invest in fewer portfolio companies and thus be less diversified. Unspecified Investments. The business of identifying, structuring, completing and realizing private equity investments involves a high degree of uncertainty and is subject in some cases to the prevailing capital market, regulatory or political environment. There can be no assurance that the Private Equity Programs will be able to identify or complete portfolio investments that satisfy the Private Equity Programs’ rate of return objectives or, if completed, realize such investments for fair or attractive values or be able fully to invest its Commitments.

Lack of Sufficient Investment Opportunities. It is possible that the Private Equity Programs will never be fully invested if enough sufficiently attractive investments are not identified and/or consummated. The business of identifying, structuring, and completing private equity transactions is highly competitive. Potential competitors include other investment funds, strategic industry acquirers and other financial investors. Other investment funds with similar investment objectives to the Private Equity Programs may have more relevant experience, greater financial resources, a greater willingness to take on risk, and/or more personnel. As a result, the Private Equity Programs may experience difficulty identifying and consummating investments, and the terms upon which investments can be made may be less favorable than obtained by any prior AEA investment.

To the extent that the Private Equity Programs encounter significant competition for investments, returns to the Limited Partners may decrease. In addition, it is possible that a Private Equity Program will never be fully invested if enough attractive investments are not identified and consummated. Regardless of the extent to which the commitments of investors are invested, the investors will be required to bear management fees during the applicable investment periods based on the entire amount of their capital commitments as well as other expenses as set forth in the applicable partnership agreement even if a Private Equity Program fails to make any investment.

Illiquidity; Lack of Current Distributions. The Private Equity Programs should be viewed as illiquid. It is uncertain as to when profits, if any, will be realized. Losses on unsuccessful investments may be realized before gains on successful investments. While it may be possible for a portfolio company to be sold at any time, it is generally expected that such a sale will not occur until a number of years after the initial investment in such portfolio company, and generally a profit on an investment in a portfolio company will not be realized until its sale. Before such time, there may be no current return on such investment, and the expenses of operating the Private Equity Program (including management fees) may exceed the Private Equity Programs income, thereby requiring that the difference be paid from the Private Equity Program’s capital (including the aggregate unfunded commitments). The Private Equity Programs’ ability to dispose of investments may be limited for several reasons (some or all of which may be outside of AEA’s control), including the absence of an established market for such investments, as well as contractual and other limitations on transfer or other restrictions that would interfere with subsequent sales of such investments or adversely affect the terms upon which a disposition could be made. Any possibility of a disposition in the public markets will depend upon favorable market conditions, including receptiveness to initial or secondary public offerings for the companies in which the Private Equity Programs invests and an active mergers and acquisitions (or recapitalizations and reorganizations) market, among other factors.

Broad Investment Guidelines. The Private Equity Programs may pursue additional investment strategies and may modify or depart from their initial investment strategies, investment processes, and investment techniques as each program determines. The Private Equity Programs may pursue investments outside of industries and sectors in which the principals of the Private Equity Programs have previously made investments.

Leveraged Investments. The Private Equity Programs may make use of leverage by incurring or causing portfolio companies to incur debt to finance a portion of its investment in a given portfolio company, including in respect of companies not rated by credit agencies. Leverage generally magnifies both the Private Equity Programs’ opportunities for higher returns and their risk of loss from a particular investment, and the magnification of the risk of loss may be substantial. The cost and availability of leverage is highly dependent on the state of the broader credit markets (which may be impacted by regulatory restrictions and guidelines), which state is difficult to accurately forecast. As a result, at times it may be difficult to obtain or maintain the desired degree of leverage. The availability of leverage also is subject to governmental and regulatory oversight, and certain governmental bodies may restrict or otherwise discourage lending that results in companies carrying large amounts of debt.

The use of leverage by a portfolio company may impose restrictive financial and operating covenants on a company, in addition to the burden of debt service, and may impair its ability to operate its business as desired and/or finance future operations and capital needs. Such leverage will increase a portfolio company’s exposure to any deterioration in its industry, competitive pressures, adverse economic environment or rising interest rates. As a result, any decline in the value of a leveraged portfolio company may be accelerated and magnified in a market downturn. In the event any portfolio company cannot generate adequate cash flow to meet its debt service, the Fund may suffer a partial or total loss of capital invested in such portfolio company, which could adversely affect the Fund’s returns. Additionally, in such a situation, lenders would typically have a claim that has priority over any claim by the Fund to the assets of such portfolio company in an insolvency event or proceeding. Should the credit markets be limited or costly at the time the Fund determines that it is desirable to sell all or a portion of a portfolio company, the Fund may not achieve an exit multiple or enterprise valuation consistent with its forecasts for such portfolio company. If a portfolio company is unable to obtain favorable financing terms for its investments, refinancing its indebtedness or maintain a desired or optimal level of financial leverage, the Fund may hold a larger than expected equity investment in such portfolio company and may realize lower than expected returns from such portfolio company, which would likely adversely affect the Fund’s returns. Any failure by lenders to provide previously committed financing could also expose the Fund to potential claims by seller of prospective portfolio companies that the Fund may have contracted to purchase. A Fund may also borrow money or guaranty indebtedness (such as a guaranty of a portfolio company’s debt) or otherwise be liable therefor, and in such situations it is not expected that the Fund would be compensated for providing such guaranty or exposure to such liability. Although use of such borrowing facilities enhances the relevant Fund’s general partner’s ability to close transactions quickly, such activity also increases risk and raises the possibility that the general partner will need to call additional capital to pay off such debt. The use of leverage by a Fund may result in interest expense and other costs to such Fund that may exceed distributions made to such Fund or appreciation of its investments. A Fund may incur leverage on a joint and several basis with one or more other investment funds and entities managed by the Advisers or its affiliates, and in connection with incurring such indebtedness, the General Partner of such Fund may, in its sole discretion, cause such Fund to enter into one or more agreements to obtain a right of contribution, subrogation or reimbursement from or against such entities. However, it is possible that, if and when a Fund were to seek to enforce any such right, any such other fund could default on its obligation and/or such right may otherwise be unenforceable. In addition, to the extent a Fund incurs leverage or provides such guaranties, such amounts may be secured by capital commitments made by such Fund’s investors and other fund assets. The inability of a Fund to repay any leverage secured by the capital commitments of the Fund could enable a lender to issue a capital call directly to the investors of such Fund.

Bridge Financing. The Private Equity Programs may lend to portfolio companies on a short- term, unsecured basis or may otherwise invest in a portfolio company on an interim basis with the expectation of a subsequent refinancing or syndication. For reasons not always in a Fund’s control, any such refinancing or syndication may not occur, which would result in such bridge financing or interim investment remaining outstanding longer than anticipated. In such event, such Fund may have more risk associated with such investment, or a larger overall investment in such portfolio company than originally anticipated.

Litigation. The Private Equity Programs’ business and investment activities expose them to the risk of third-party litigation. Accordingly, in the ordinary course of its business, a Fund may be subject to litigation from time to time. Under the Partnership Agreement of such Fund, the Fund generally will be responsible for indemnifying the general partner of a Fund and certain other persons and entities for costs they may incur with respect to such litigation not covered by insurance. The outcome of litigation proceedings may materially and adversely affect the value of the Fund, and such litigation may continue without resolution for extended periods of time. Additionally, litigation may consume substantial amounts of the general partner’s and the Principals’ time and attention, and that time and the devotion of these resources to litigation may, at times, be disproportionate to the amounts at stake in the litigation. Restricted Nature of Investment Positions. Generally, there will be no readily available market for a substantial number of the Private Equity Programs’ investments, and hence, most of the Private Equity Programs’ investments will be difficult to value. Certain investments may be distributed in kind to the investors and it may be difficult to liquidate the securities received at a price or within a time period that is determined to be ideal by such investors. After a distribution of securities is made to investors, many investors may decide to liquidate such securities within a short period of time, which could have an adverse impact on the price of such securities. The price at which such securities may be sold by such investors may be lower than the value of such securities determined pursuant to the Fund’s Partnership Agreement, including the value used to determine the amount of carried interest available to the Fund’s general partner with respect to such investment.

Reliance on the Advisers and Portfolio Company Management. Investment programs within the Private Equity Programs may have a limited operating history and will be entirely dependent on the Advisers and their Principals. Control over the operation of the Private Equity Programs will be vested entirely with the Advisers and their Principals, and the Private Equity Programs’ future profitability will depend largely upon the business and investment acumen of the Principals. The loss of service of one or more of the Principals could have an adverse effect on the Private Equity Programs’ ability to realize its investment objectives. Investors generally have no right or power to take part in the management of the Private Equity Programs, and as a result, the investment performance of the Private Equity Programs will depend entirely on the actions of the Advisers and their Principals. Although the Advisers will monitor the performance of each Private Equity Program investment, it will primarily be the responsibility of each portfolio company’s management team to operate the portfolio company on a day-to-day basis. Although the Private Equity Programs generally intend to invest in companies with, or with the ability to retain, strong management, there can be no assurance that the management of these companies will continue to operate a company successfully or remain with the company following the Private Equity Program’s investment.

Active Management. Private Equity Programs may, in certain circumstances, take majority positions, which may be alongside other investors, such as institutions, other pooled investment vehicles, and management, while providing equity financing at all stages of a company’s lifecycle. Depending upon the amount of equity owned by a Fund, any relevant contractual arrangements between a portfolio company and a Fund, and other relevant factual circumstances, such majority position could result in an extension of the ninety-day bankruptcy preference period to one year with respect to payments made to it. In addition, because of its equity ownership, representation on the company’s board of directors, and/or contractual rights, a Fund may often be thought to control, participate in the management of or influence the conduct of such portfolio company, its other security holders, its creditors or governmental agencies. Further, investments alongside other investors, including in the event that a Fund holds a majority position in such portfolio company, may involve certain additional risks not present in investments where a third party is not involved. Risk in Effecting Operating Improvements. The success of each Fund’s investment strategy is likely to depend, in part, on the ability of a Fund to effect improvements in the operations of certain portfolio companies. Identifying and implementing operations improvements at portfolio companies entails a high degree of uncertainty. In addition, executing operational improvements may divert the attention of key portfolio company personnel and disrupt normal business. There can be no assurance that a Fund will be able to successfully identify and implement such improvements. Risk Relating to Due Diligence of and Conduct at Portfolio Companies. Before making an investment, Private Equity Programs will often conduct such due diligence as it deems reasonable and appropriate based on the facts and circumstances applicable to such investment. Due diligence may entail evaluation of important and complex business, financial, tax, accounting, technical, environmental and legal issues. Outside consultants, legal advisors, accountants, investment banks and other third parties may be involved in the due diligence process to varying degree depending on the type of investment and the facts and circumstances related thereto, and Private Equity Programs may rely on the advice received from such third parties. Investment analyses and decisions may be limited, and Private Equity Programs will often be undertaken on an expedited basis in order for the Fund to compete for investment opportunities and/or consummate investments. In such cases, the information available to the Private Equity Programs at the time of an investment decision may be limited, and the Private Equity Programs may not have access to the detailed information necessary for a full evaluation of an investment opportunity. The due diligence investigation carried out with respect to any investment opportunity is unlikely to reveal or highlight all relevant facts that may be necessary or helpful in evaluating such investment opportunity. Moreover, such an investigation will not necessarily result in an investment being successful or even ensure a return on invested capital.

Outbreaks of Infectious or Contagious Diseases; Pandemics. A public health emergency could result in significant adverse impacts on the Adviser’s Clients. The extent of the impact of any such emergency depends on many factors, all of which are highly uncertain and cannot be predicted, which may impact the Adviser’s Clients’ ability to source, diligence and execute new investments and to manage, finance and exit investments in the future, or cause significant changes or reductions in revenue and growth, unexpected operational losses and liabilities, impairments to credit quality and reductions in the availability of capital. Likewise, social or governmental mitigation actions may (among a wide variety of other potential effects) constrain or alter existing financial, legal and regulatory frameworks in ways that could adversely affect a Client’s ability to fulfill their investment objectives. They may also impair the ability of Clients’ investments or their counterparties to perform their respective obligations under debt instruments and other commercial agreements (including their ability to pay obligations as they become due), potentially leading to defaults with uncertain consequences. In addition, the operations of a Client, their investments, the applicable General Partner, and the Adviser may be significantly impacted, or even temporarily or permanently halted, as a result of government quarantine measures, restrictions on travel and movement, remote-working requirements and other social, political, financial, legal, regulatory and/or other factors related to an actual or threatened public health emergency (e.g., COVID-19), including its potential adverse impact on the health of any such entity’s personnel. These measures may also hinder such entities’ ability to conduct their affairs and activities as they normally would, including by impairing usual communication channels and methods, hampering the performance of administrative functions such as processing payments and invoices, and diminishing their ability to make accurate and timely projections of financial performance. Projections. Projected operating results of a company in which the Private Equity Programs invest normally will be based primarily on financial projections prepared by each company’s management, with adjustments to such projections made by the General Partner of the relevant Fund in its sole discretion. In all cases, projections are only estimates of future results that are based upon information received from a portfolio company and third parties and assumptions made at (in whole or in part) the time the projections are developed. Also, general economic factors, which are not predictable, can have a material effect on the reliability of projections. The inaccuracy of certain assumptions, the failure to satisfy certain financial requirements and the occurrence of other unforeseen events could impair the ability of a portfolio company to realize projected values. There can be no assurance that the results set forth in any projections will be attained, and actual results may differ significantly from projections.

Need for Follow-On Investments. Following its initial investment in a given portfolio company, the Adviser may determine, on behalf of the Private Equity Programs, to provide additional funds or otherwise increase its investment to these portfolio companies (whether for opportunistic reasons, to fund the needs of the portfolio company, as an equity cure under applicable debt documents or for other reasons). There is no assurance that the Private Equity Programs will make follow-on investments or that they will have sufficient funds to make all or any of these investments. Any determination by the Private Equity Programs not to make follow-on investments or their inability to make these investments may have a substantial negative effect on a portfolio company in need of such an investment or may result in a lost opportunity for the Private Equity Programs to increase their participation in a successful operation.

Non-U.S. Investments. The Private Equity Programs may (directly or through the Europe Fund, in the case of the 2006 Program) invest a significant portion of the aggregate commitments in portfolio companies that are organized or have substantial sales or operations outside of the United States, its territories, and possessions. Investments such as these may be subject to certain additional risk due to, among other things, unstable governments, potentially unsettled points of applicable governing law, the risks associated with fluctuating currency exchange rates, capital repatriation regulations (as these regulations may be given effect during the terms’ of the Private Equity Programs), the application of complex U.S. and foreign tax rules to cross-border investments, possible imposition of foreign taxes on the Private Equity Programs and/or the investors with respect to the Private Equity Programs’ income, and possible foreign tax return filing requirements for the Private Equity Programs and/or the investors.

Public Company Holdings. The Private Equity Programs’ investment portfolios may contain securities issued by publicly held companies. These investments may subject the Private Equity Programs to risks that differ in type or degree from those involved with investments in privately held companies. These risks include, without limitation, greater volatility in the valuation of these companies, increased obligations to disclose information regarding these companies, limitations on the ability of the Private Equity Programs to dispose of these securities at certain times, increased likelihood of shareholder litigation against the companies’ board members, including AEA personnel, and increased costs associated with each of the aforementioned risks. Director Liability. The Private Equity Programs expect to acquire control of many of the companies in which they invest and generally obtain the right to appoint a representative to the board of directors of the companies in which they invest. Serving on the board of directors of a portfolio company or otherwise controlling it exposes the Private Equity Programs’ representatives, and ultimately the Private Equity Programs, to potential liability. Not all portfolio companies may obtain insurance with respect to this liability, and the insurance that portfolio companies do obtain may be insufficient to adequately protect officers and directors from this liability. Minority Investments. Although the Private Equity Programs intend to invest primarily in entities that they control, they may invest in entities in which they are required to share control with others or in which they have only minority representation on the board of directors (or similar governing body) and/or limited rights to control the entity’s business. The Private Equity Programs’ investments in entities they do not control could materially affect their ability to influence the business and cause their exit from an investment.

Certain Consultants. The Advisers or their affiliates, a Fund or its General Partner, and the portfolio companies may from time to time retain other companies and individuals (“Special Consultants”) which may be affiliates of the General Partner, employees, partners, members, shareholders, officers, directors and managers of such affiliates, portfolio companies of other funds, third party consultants (including individual consultants and external executives), “operating advisors,” “strategic partners,” “executive partners” or “senior advisors.” These Special Consultants may be engaged to provide services to, or in connection with, a Fund or its portfolio companies or in one or more industry sectors, or in connection with their activities, including in relation to the identification, acquisition, holding, recapitalization, restructuring, refinancing or improvement and disposition of portfolio companies and prospective portfolio companies, operational aspects of such companies and/or serving on the boards of directors of portfolio companies (“Services”). A Special Consultant may provide services to a Fund and one or more other Fund.

Certain fees and expenses associated with the Services (collectively “Consulting Fees and Expenses”), may be paid and/or reimbursed by applicable portfolio companies and/or the Fund (either directly or through the Advisers or their affiliates) and will not be offset or otherwise reduce management fees. Consulting Fees and Expenses may, at the sole discretion of the applicable general partner taking into account the particular Services, include cash fees, a per diem or project-based retainer or fee, monthly fee, performance fee, profits or equity interest in a portfolio company (the terms of which may be different than the profits or equity interest owned by the Fund) or other incentive-based compensation to the Special Consultant, the amount of which may be determined according to one or more methods, including the value of the time (including an allocation for overhead and other fixed costs) spent by the Special Consultant, a percentage of the value of such portfolio company, a percentage of the amount of Fund capital invested in and/or committed to such portfolio company, amounts charged by other providers for comparable services and/or a percentage of cash flows from such portfolio company. Additionally, Special Consultants may be provided opportunities to co-invest in one or more portfolio companies. Special Consultants may have a limited partner or profit interest in the Fund, the General Partner, other funds or an affiliate of the General Partner. Although the General Partner intends to retain Special Consultants in an attempt to reduce costs to portfolio companies (and, ultimately, the Fund) and/or improve portfolio company performance, due to a number of factors any such retention may result in limited or no cost savings or an increase in costs, in which case portfolio company performance may only be marginally improved or may be negatively affected. In addition, there can be no assurance that no other service provider is more qualified to provide the applicable services or could provide such services at lesser cost. In addition, portfolio companies of a Fund may pay Special Consultants to perform Services that, directly or indirectly, benefit AEA, its affiliates, Other Funds and/or portfolio companies of other funds. Consequently, AEA, its affiliates and/or portfolio companies of Other Funds may receive Services without being charged or at below-market rates. Conversely, portfolio companies of a Fund may benefit from Services that are paid for by AEA, its affiliates and/or portfolio companies of other funds. Likewise, certain Other Funds may pay Special Consultants to perform services that, directly or indirectly, benefit AEA, its affiliates, the Fund and/or portfolio companies of the Fund.

Co-Investments. The Advisers and their affiliates may, in their sole discretion, provide or commit to provide co-investment opportunities to one or more investors and/or other persons, in each case on terms to be determined by the applicable general partner in its sole discretion. Conflicts of interest may arise in the allocation of such co-investment opportunities. The allocation of co-investment opportunities, which may be made to one or more persons for any number of reasons as determined by the applicable general partner in its sole discretion, may be for a variety of reasons and not solely with respect to the interests of the applicable Fund or any individual investor. In exercising its sole discretion in connection with such co-investment opportunities, the applicable general partner may consider some or all of a wide range of factors, which may include the likelihood that an investor may invest in a future fund sponsored by the Advisers or its affiliates. A Fund may co-invest with third parties through partnerships, joint ventures or other entities or arrangements. Such investments may involve risks not present in investments where a third-party is not involved, including the possibility that a third-party co- venturer or partner may at any time have economic or business interests or goals that are inconsistent with those of such Fund, or may be in a position to take action contrary to the investment objectives of the Fund. In addition, a Fund may in certain circumstances be liable for actions of its third-party co-venturer or partner. In general, co-investors described in this paragraph do not pay or share fees and expenses related to transactions that the Fund does not close or in which such co-investor does not invest and they are borne by the applicable Private Equity Program (to the extent set forth in the operative documents of each program). For unconsummated deals that would have been allocated among more than one Private Equity Program or other AEA private equity fund, the fees and expenses of the unconsummated deal are allocated among the AEA private equity funds that would have participated in the deal in a manner that the General Partner determines to be fair and equitable. Valuation of Assets. There is not expected to be an actively traded market for most of the securities owned by a Fund. When estimating fair value, the general partner will apply a methodology it determines to be appropriate based on accounting guidelines and the applicable nature, facts and circumstances of the respective investments. The process of valuing securities for which reliable market quotations are not available is based on inherent uncertainties and the resulting values may differ from values that would have been determined had an active market existed for such securities and may differ from the prices at which such securities ultimately may be sold. The exercise of discretion in valuation by the general partner may give rise to conflicts of interest, including in connection with determining the amount and timing of distributions of carried interest and the calculation of management fees. Cybersecurity Risks. The information technology systems of the Adviser, Private Equity Programs or their respective portfolio companies and/or their respective service providers may be vulnerable to damage or interruption from computer viruses, network failures, computer and telecommunication failures, infiltration by unauthorized persons and security breaches, usage errors by their respective professionals, power outages and catastrophic events. If such a system is compromised, becomes inoperable for an extended period of time or ceases to function properly, Private Equity Programs or their respective portfolio companies may be required to spend time and/or incur expenses seeking to fix or replace such system or otherwise remedy the effects of such issues. The failure of such a system and/or disaster recovery plan may cause significant interruptions in the Adviser, Private Programs or their respective portfolio company’s operations and may result in a failure to maintain the security, confidentiality or privacy of sensitive data.

Material Non-public Information. By reason of their responsibilities in connection with other activities of the Adviser, certain employees of the Private Equity Programs may acquire confidential or material non-public information or be restricted from initiating transactions in certain securities. Private Equity Programs will not be free to act upon any such information. Due to these restrictions, Private Equity Programs may not be able to initiate a transaction that it otherwise might have intimated and may not be able to sell an investment that otherwise might have sold.

AEA Debt Programs
No Assurance of Investment Return. The Advisers cannot provide assurance that they will be able to choose, make, and realize portfolio investments in any particular company or portfolio of companies. There can be no assurance that the AEA Debt Programs will be able to generate returns for their investors or that the returns will be commensurate with the risks of investing in the types of companies and transactions described herein. There can be no assurance that any investor will receive any distribution from the AEA Debt Programs. Accordingly, an investment in the AEA Debt Programs should only be considered by persons who can afford a loss of their entire investment. Past activities of investment entities associated with Advisers provide no assurance of future success. Investments in Middle Market Companies. The AEA Debt Programs intend to invest in middle market companies. Portfolio investments in these companies may involve greater risks than generally are associated with investments in larger companies. Middle market companies tend to have lower capitalization and/or fewer resources and, therefore, often are more vulnerable to financial failure. These companies also may have shorter operating histories on which to judge future performance. Operating and Financial Risks of Portfolio Companies. One of the fundamental risks associated with the AEA Debt Programs’ investments is credit risk, which is the risk that an issuer will be unable to make principal and interest payments on its outstanding debt obligations when due. The AEA Debt Programs’ return to investors would be adversely impacted if an issuer of debt securities in which the AEA Debt Programs invest becomes unable to make these payments when due. Companies in which the AEA Debt Programs invest could deteriorate as a result of, among other factors, adverse developments in their businesses, changes in the competitive environment, or an economic downturn. As a result, companies which the AEA Debt Programs expected to be stable may operate, or expect to operate, at a loss or have significant variations in operating results, may require substantial additional capital to support their operations or to maintain their competitive position, or may otherwise have a weak financial condition or be experiencing financial distress. Illiquid and Long-Term Investments. The AEA Debt Programs intend to invest their assets in long-term investments, which are likely to be illiquid. Illiquidity may result from the absence of an established market for investments as well as legal or contractual restrictions on their resale. Investors should expect that they will not receive a return of capital for several years even if the AEA Debt Programs’ investments prove successful. In addition, there can be no assurance that the distributions, if any, from the AEA Debt Programs to its investors will be sufficient to cover any investor’s tax obligations arising from taxable income of the AEA Debt Programs. Moreover, current income on securities acquired by certain of the AEA Debt Programs may be in the form of payable-in-kind (“PIK”) interest, thereby delaying the receipt of cash proceeds from said investment. Investments Longer Than Term. The AEA Debt Programs may make investments which may not be advantageously disposed of prior to the date the AEA Debt Programs will be dissolved, either by expiration of the AEA Debt Programs’ term or otherwise. Although the Advisers expect that investments will either be disposed of prior to termination or be suitable for in- kind distribution at dissolution and the Advisers have a limited ability to extend the term of the AEA Debt Programs, the AEA Debt Programs may have to sell, distribute or otherwise dispose of investments at a disadvantageous time as a result of dissolution. Follow-On Investments. The AEA Debt Programs may be called upon to provide additional funding for their portfolio companies or have the opportunity to increase their investments in these portfolio companies. There can be no assurance that the AEA Debt Programs will wish to make follow-on investments or that they will have sufficient funds to do so. Any decision by the AEA Debt Programs not to make follow-on investments or their inability to make them may have a substantial negative impact on a portfolio company in need of such an investment and may diminish the AEA Debt Programs’ investment therein. Investments in Publicly Traded Securities. The AEA Debt Programs may at any time invest a portion of capital commitments in securities that are publicly traded and are therefore subject to the risks inherent in investing in public securities. When investing in public securities, the AEA Debt Programs may be unable to obtain financial covenants or other contractual rights, including management rights, that they might otherwise be able to obtain in making privately negotiated investments. Moreover, the AEA Debt Programs may not have the same access to information in connection with investments in public securities, either when investigating a potential investment or after making an investment, as compared to privately negotiated investments. Furthermore, the AEA Debt Programs may be limited in their ability to make investments, and to sell existing investments, in public securities because Advisers may be deemed to have material, nonpublic information regarding the issuers of those securities or as a result of other internal policies. The inability to sell public securities in these circumstances could materially adversely affect the investment results of the AEA Debt Programs. Non-U.S. Investments. A portion of the capital commitments may at any time be invested in portfolio companies organized and operating principally outside of North America. These investments will involve risks not typically associated with investments in the securities of U.S. companies. For instance, investments in non-U.S. businesses (i) may require significant government approvals under corporate, securities, exchange control, non-U.S. investment, and other similar laws and regulations, (ii) may require financing and structuring alternatives and exit strategies that differ substantially from those commonly used in the United States, (iii) will expose the AEA Debt Programs to potential losses arising from changes in foreign currency exchange rates and (iv) may subject the AEA Debt Programs and/or the investors to additional or unforeseen taxation in the jurisdictions of the AEA Debt Programs’ investments. The foregoing factors may increase transaction costs and adversely impact the value of the AEA Debt Programs’ investments in non-U.S. portfolio companies. Competitive Nature of the AEA Debt Programs’ Businesses. The businesses of the AEA Debt Programs are highly competitive and the Advisers will be competing for investment opportunities with other groups, including other mezzanine funds, middle market funds, financial institutions, CLOs, senior debt funds, private equity funds, direct investment firms, and merchant banks, and the Advisers may be unable to identify a sufficient number of attractive investment opportunities for the AEA Debt Programs to meet their investment objectives. Other investors may make competing offers for investment opportunities that are identified, and even after an agreement in principle has been reached with the board of directors or owners of an investment target, consummating the transaction is subject to a multitude of uncertainties, only some of which are foreseeable or within the control of the Advisers. The need to compete for investment opportunities may make it necessary for the AEA Debt Programs to offer borrowers, or companies in which they make portfolio investments, more attractive terms than otherwise might be the case. Future and Past Performance. The performance of the Advisers or their affiliate’s prior investments is not necessarily indicative of the AEA Debt Programs’ future results. While the Adviser intends for the AEA Debt Programs to make portfolio investments that have estimated returns commensurate with the risks undertaken, there can be no assurances that the targeted internal rate of return will be achieved. On any given investment, loss of principle is possible. AEA Debt Program Leverage. Certain of the AEA Debt Programs expect to incur indebtedness for borrowed money and may pledge portfolio investments and unfunded capital commitments as collateral against such indebtedness. Such indebtedness may be incurred on a portfolio-wide basis or against specific portfolio investments. The extent to which the AEA Debt Programs use leverage may have important consequences to the investors, including, but not limited to, the following: (i) greater fluctuations in the net assets of the AEA Debt Programs, (ii) use of cash flow for debt service, rather than for additional investments, distributions, or other purposes, (iii) to the extent that AEA Debt Programs revenues are required to meet principal payments, the investors may be allocated income (and therefore tax liability) in excess of cash available by distribution and (iv) in certain circumstances the AEA Debt Programs may be required to prematurely harvest investments to service its debt obligations. There can also be no assurance that the AEA Debt Programs will have sufficient cash flow to meet its debt service obligations. As a result, the AEA Debt Programs’ exposure to losses may be increased due to the illiquidity of their investments generally. Additionally, the Fund may choose to make all investments during the early life of the Fund entirely on a leveraged basis, prior to the Fund requesting or receiving any capital contributions from the Partners. Unfavorable performance of or a small number of such investments may result in amplified losses for the Fund and limit the Fund’s ability to invest in the future.

The Fund’s assets, including any investments made by the Fund, the Capital Commitments of the Partners, and any capital held by the Fund, are available to satisfy all liabilities and other obligations of the Fund. If the Fund defaults on secured indebtedness, the lender may foreclose and the Fund could lose its entire investment in the security for such loan. Parties seeking to have the liability satisfied may have recourse to the Fund’s assets generally and not be limited to any particular asset and may require the Partners to contribute their Capital Commitments in order to satisfy such liabilities.

Conversely, the ability of the Fund to attain its investment objectives depends in part on its ability to borrow money on favorable terms. To the extent the Fund does not employ leverage with respect to the Fund’s portfolio, the Fund’s investment returns may be lower than those that could have been achieved using leverage and there are risks that the Fund will not be able to maintain the leverage facility on favorable terms, or at all.

It is possible that the Fund may decide to repay any leverage with funds drawn from the commitments of the limited partners of the Fund or to make future portfolio investments with little or no corresponding leverage. If the Fund decides to pay down its leverage or to make its investment with little or no leverage, the returns of the limited partners of the Fund may be adversely affected.

Risks Arising from Purchase of Debt on a Secondary Basis. AEA Debt Programs may invest in loans and debt securities acquired on a secondary basis. AEA Debt Programs are unlikely to be able to negotiate the terms of such debt as part of its acquisition and, as a result, these investments may not include some of the covenants and protections the AEA Debt Programs generally seek. Even if such covenants and protections are included in the investments held by the AEA Debt Program, the terms of the investments may provide portfolio companies substantial flexibility in determining compliance with such covenants. In addition, the terms on which debt is traded on the secondary market may represent a combination of the general state of the market for such investments and either favorable or unfavorable assessments of particular investments by the sellers thereof. Loan Origination. In originating loans, AEA Debt Programs will compete with a broad spectrum of lenders some of which may be willing to provide capital on better terms (from a borrower’s standpoint) than the AEA Debt Programs. Some lenders may have greater financial resources that the AEA Debt Programs. The increased competition for, or a diminution in the available supply of, qualifying loans may result in lower yields on such loans, which could reduce returns to the AEA Debt Programs. The Level of analytical sophistication, both financial and legal, necessary for successful financing to companies, particularly companies experiencing significant business and financial difficulties is high. There can be no assurance that the AEA Debt Programs will correctly evaluate the value of the assets collateralizing these loans or the prospects for successful repayment or a successful reorganization or similar action. Loan origination involves a number of particular risks that may not exist in the case of secondary debt purchases. The AEA Debt Programs may have to rely more on its own resources to conduct due diligence of the borrower. As a result, the diligence is likely to be more limited than the diligence conducted for a broadly syndicated transaction involving an underwriter. Loan origination may also involve additional regulatory risks given licensing requirements for certain types of lending in some jurisdictions. The AEA Debt Programs will attempt to ensure that their investments are compliant with such regulations by reviewing and taking advice on loan origination regulations in each relevant country. However, the scope of these regulatory requirements (and certain permitted exemptions) may vary from jurisdiction to jurisdiction and may change from time to time. Risks Relating to Due Diligence of and Conduct at Portfolio Companies. When conducting due diligence and making an assessment regarding an investment, the AEA Debt Programs will rely on the resources available to them, including information provided by the target of the investment and, in some circumstances, third-party investigations. The due diligence investigation that the AEA Debt Programs carry out with respect to any investment opportunity may not reveal or highlight all relevant facts that may be necessary or helpful in evaluating such investment being successful. There can be no assurance that attempts to provide downside protection with respect to investments will achieve their desired effect and potential investors should regard an investment in any of the AEA Debt Programs as being speculative and having a high degree of risk. Projections and Third-Party Reports. The capital structure of an AEA Debt Program investment and the terms and targeting returns of such investment are established generally on the basis of financial, macroeconomic and other applicable projections. Projected operating results normally will be based primarily on investment executive judgements or third-party advice and reports. In all cases, projections are only estimates of future results that are based upon assumptions made at the time that the projections are developed. There can be no assurance that the projected results will be achieved, and actual results may vary significantly from the projections. General economic, natural and other conditions, which are not predictable, can have an adverse impact on the reliability of such projections. Borrower Fraud; Breach of Covenant. AEA Debt Programs will seek to obtain structural, covenant and other contractual protections with respect to the terms of its investments as determined appropriate under the circumstances. There can be no assurance that such attempts to provide downside protection with respect to its investments will achieve their desired effect and potential investors should regard an investment in AEA Debt Programs as being speculative and having a high degree of risks. Of paramount concern in originating or acquiring the financing contemplated by the AEA Debt Programs is the possibility of material misrepresentation or omission on the part of the borrower or other credit support providers or breach of covenant by such parties. Such inaccuracy or incompleteness or breach of covenants may adversely affect the valuation of the collateral underlying the loans or the ability of the AEA Debt Programs to perfect or effectuate a lien on the collateral securing the loan or otherwise realize on the investment. The AEA Debt Programs will rely upon the accuracy and completeness of representations made by borrowers, to the extent reasonable, but cannot guarantee such accuracy or completeness. Obligation of Good Faith to the Borrower. Generally, lender liability is founded upon the premise that an institutional lender has violated a duty (whether implied or contractual) or good faith and fair dealing owed to the borrower or has assumed a degree of control over the borrower resulting in the creation of a fiduciary duty owed to the borrower or its other creditors. AEA Debt Programs may be subject to potential allegations of lender liability. In addition, courts have in some cases applied the doctrine of equitable subordinations to subordinate the claim of a lending institution against a borrower to claims of other creditors or the borrower when the lending institution is found to have engaged in unfair, inequitable or fraudulent conduct.

Reliance on Management of Portfolio Companies. While the Advisers intend to invest in companies with proven operating management in place, there can be no assurance that this management will continue to operate successfully. Although the Advisers will monitor the performance of each investment, the AEA Debt Programs will rely upon management to operate the portfolio companies on a day-to-day basis. In addition, certain of the AEA Debt Programs’ investments may be in businesses with limited operating histories. Although the AEA Debt Programs generally intend to invest in companies, with, or with the ability to retain, strong management, there can be no assurance that the management of these companies will continue to operate a company successfully or remain with the company following the AEA Debt Programs’ investment. Bankruptcy of Portfolio Companies. The AEA Debt Programs may make investments in portfolio companies that may experience financial difficulties and become insolvent or file for bankruptcy protection. Various U.S. federal and state laws in connection with these bankruptcy proceedings could operate to the detriment of the AEA Debt Programs. There is also a risk that a court may subordinate the AEA Debt Programs’ investment to other creditors or require the AEA Debt Programs to return amounts previously paid to them by a portfolio company that become insolvent or files for bankruptcy, a risk that could increase if the AEA Debt Programs have management rights or hold equity securities in these portfolio company. Financial Market and Interest Rate Fluctuations. General fluctuations in the market prices of securities and interest rates may affect the AEA Debt Programs’ investment opportunities and the value of the AEA Debt Programs’ investments. The market value of debt instruments generally fluctuate with, among other things, the financial condition of the issuer. Prepayments of floating rate debt instruments are likely to be made during any period of declining interest rate spreads or by issuers whose credit standing improves significantly. Likewise, prepayments of fixed rate debt instruments are likely to be made in any period of declining interest rates, although premiums may be payable. Any such prepayments would force the AEA Debt Programs to replace the prepaid debt instruments with potentially lower-yielding investments. Instability in the securities market generally may also increase the risks inherent in the AEA Debt Programs’ investments. Investments in Highly Leveraged Companies. The AEA Debt Programs’ investments are expected to include investments in companies whose capital structures may have significant leverage, a considerable portion of which may be at floating interest rates. The leveraged capital structure of these companies will increase their exposure to adverse economic factors such as rising interest rates, downturns in the economy or further deteriorations in the financial condition of the company or its industry. This leverage may result in more serious adverse consequences to these companies (including their overall profitability or solvency) in the event these factors or events occur than would be the case for less leveraged companies. For example, rising interest rates may signific please register to get more info

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Related persons of the Advisers serve as general partners of each of the Funds and may share common officers, partners, consultants or persons occupying similar positions. Related persons of the Advisers, AEA Investors (UK) LLP and AEA Investors (Asia) Ltd., provide advice to the Advisers with respect to investments and prospects located in Europe and Asia, respectively, and are relying advisers with respect to AEA QP Advisers LLC. The general partners of various Funds have filed for an exemption from registration as commodity pool operators in accordance with CFTC Rule 4.13(a)(3) on behalf of the Clients.

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TRANSACTIONS AND PERSONAL TRADING
The Advisers have adopted a Code of Ethics (the “Code”) to help ensure that their personnel comply with all applicable federal securities laws and with the fiduciary duties and anti-fraud rules to which they are subject. The Code is based on the principle that the Advisers and their personnel owe a fiduciary duty to the Advisers’ Clients. The Code requires Advisers’ personnel to act in good faith and in the best interest of Clients, to conduct themselves ethically so as to disclose and manage any actual or potential conflict of interest and to promptly report violations of the Code. The Advisers will provide a copy of the Code to Clients and prospective investors in Clients upon request. The Advisers require all employees (and members of the household of the employee) to obtain the prior approval of the Adviser for all personal securities transactions in covered securities. Advisers do not generally permit employees to purchase or sell securities in which Advisers have made an investment on behalf of Clients, or which are under active consideration for investment or divestiture by Advisers on behalf of Clients, except at the same time and on the same terms as the Clients. The Advisers and their employees may come into possession, from time to time, of material nonpublic information or other confidential information about public companies which, if disclosed, might affect an investor’s decision to transact in a security. Under applicable law, the Advisers and their employees may be prohibited from improperly disclosing or using such information for their personal benefit or for the benefit of any other person, regardless of whether such person is a Client. Employees of the Advisers and employees of Advisers’ affiliated companies invest in the Funds and Participant Programs but generally without paying management and or carried interest fees (except in the case of the certain Participant Programs which require employees to pay carried interest on their invested amounts). Funds have different expense reimbursement terms, including with respect to management fee offsets, which may result in the Funds bearing different levels of expenses with respect to the same investment. See also the discussion of conflicts of interest in Item 8. please register to get more info

If Advisers buy or sell publicly traded securities for Clients, they are responsible for directing orders to broker-dealers to effect those transactions. Each Adviser selects brokers on the basis of best price, costs and execution capability. In selecting a broker to execute client transactions, each Adviser may consider a variety of factors, including: (i) the ability to effect prompt and reliable executions at favorable prices (including the applicable dealer spread or commission, if any), (ii) the operational efficiency with which transactions are effected (such as prompt and accurate confirmation and delivery), taking into account the size of order and difficulty of execution, (iii) the financial strength, integrity and stability of the broker-dealer or counter party, (iv) the competitiveness of commission rates in comparison with other broker-dealers, (v) the nature and extent of customer services (i.e., proprietary research and access to third party research services, the need for anonymity, trade adjustments and the like), (vi) accuracy of recommendations on particular securities and access to underwritten offerings and secondary markets, (vii) willingness to commit capital and quality of quotes regarding both price and size and related liquidity considerations, (viii) nature and frequency of investment coverage, and (ix) general responsiveness. In certain instances, a Client will take a portfolio company public, which requires engaging one or more underwriters and bookrunners. The Client will provide guidance to the portfolio company’s Directors when choosing underwriters and bookrunners, taking the above factors into account. The Directors will generally engage the same underwriters and bookrunners for secondary public offerings and the Client will generally use the lead underwriter for other additional transactions, including block trades related to the exit. When Advisers place orders for purchases or sales of publicly traded securities on behalf of multiple Clients, the orders are aggregated, and partially filled orders are allocated pro-rata in accordance with the number of securities intended to be purchased or sold by each Client.

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The Advisers periodically review all Private Equity and AEA Debt Fund investments. The investment professionals responsible for each investment program prepare quarterly reviews of the portfolio of such investment program that are then reviewed by AEA Investors LP’s executive staff. Each quarterly review includes a review of the operating performance, capital structure, prospects and material developments of each portfolio company. The Advisers also conduct semi-annual valuations of each investment that are reviewed and approved by the Advisers’ senior personnel. Investors in Funds receive quarterly, semi-annual and annual written reports. In certain cases, Participant Programs may only receive semi-annual and annual written reports. The quarterly reports of a Fund (for the quarters ended March 31, June 30 and September 30) include a summary of the status of each portfolio company, unaudited financial statements prepared on the basis of GAAP and an individual statement of partners’ capital. The semi-annual reports include an individual statement listing an investor’s original cost and the current gross value of each investment. The Participant Programs also provide each investor in the Participant Program a commitment summary which includes commitment amount, amount invested in each series of units of an investment, the number of units issued and remaining commitment. In the case of the Funds, the annual reports include audited annual financial statements of a Fund and Form K-1s. The Public Equity Fund is reviewed quarterly by the portfolio manager and the CEO please register to get more info

Advisers have in the past agreed, and may in the future agree, to pay certain unaffiliated persons (placement advisers) a cash fee for referring potential purchasers of interests in clients to the advisers. These arrangements generally provide for the reimbursement of expenses incurred by placement advisers, a monthly fee, and a success fee, based on the commitment made by the purchaser of interests in client referred by the placement adviser. These solicitation arrangements will comply with the requirements of Rule 206(4)-3 of the Advisers Act to the extent applicable. Any fees payable to any such placement agents will be borne by AEA indirectly through an offset against the Management Fee, although related expenses incurred pursuant to the relevant placement agent or similar agreement, including but not limited to placement agent travel, meal and entertainment expenses, may and typically are borne by the relevant Fund(s). From time to time the Advisers and its related persons may receive discounts on products and services provided by portfolio companies of Clients and/or customers or suppliers of portfolio companies. For details regarding economic benefits provided to the Advisers by non-clients with respect to break-up, transaction, monitoring, commitment, waiver and similar fees, including a description of the material conflicts and how they are addressed, please see Item 5 and Item 8 above.

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The Advisers are deemed to have custody of the Funds’ assets for purposes of the Advisers Act by virtue of their relationship with each Fund’s general partner. Except as permitted by the Advisers Act, such cash and physical securities are maintained in accounts established with qualified custodians, as defined in Rule 206(4)-2 of the Advisers Act, to the extent required by law. The Funds are subject to annual audit by an independent public accountant and the audited financial statements of the Funds, prepared in accordance with GAAP, are distributed to investors in the Funds no later than 120 days after the end of the fiscal year. please register to get more info

Advisers generally have discretionary authority to manage the assets of their Clients, subject to the investment objectives and restrictions of each Fund and each investment program. That authority is set forth in the constituent documents of the Funds and in the commitment agreements for the investment programs. The authority of Advisers to determine the securities to be purchased by the Funds is subject to the prior approval of the appropriate investment committee of the Fund. please register to get more info

Each Adviser has adopted proxy voting policies and procedures (the “Policies”). Due to the nature of the investments they make, the Advisers anticipate that they will be presented with proxy voting opportunities only in rare circumstances. The general policy of the Adviser is to vote proxy proposals (and any amendments, consents or resolutions relating to client securities), in a manner that serves the best interests of Clients, as determined by the Adviser in its discretion, taking into account the following factors: (i) the impact on the value of the investments; (ii) the anticipated associated costs and benefits; (iii) the continued or increased availability of portfolio information; and (iv) industry and business practices. Where the Adviser’s affiliated personnel serve as director(s) of a company, the Adviser will generally vote proxies in the same manner as such director(s), and where no such personnel serve as directors of a company, the determination of how to vote proxies will be made by the investment professionals responsible for the investment in consultation with the Adviser’s senior executive staff. In limited circumstances, the Adviser may refrain from voting proxies where the Adviser believes that voting would be inappropriate taking into consideration the cost of voting the proxy and the anticipated benefit to Clients. A copy of the Policies and the proxy voting record applicable to any Fund may be obtained by contacting the Adviser. please register to get more info

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