Advisory Firm ACON Investments Management, LLC (“ACON” or the “Adviser”) is a private equity investment
advisory company located in Washington, D.C. The Adviser was established in 2008 and provides
investment supervisory services to certain pooled investment vehicles described below.
The Adviser is a limited liability company organized under the laws of the State of Delaware. The
Adviser is owned by Bernard Aronson, Kenneth Brotman and Jonathan Ginns.1 The Adviser is party to an
arrangement with ACON Investments, L.L.C. (“ACON Investments” or the “Firm”) pursuant to which
ACON Investments and/or its affiliates provide the services of various private equity fund investment,
finance, accounting, tax, investor relations, legal, compliance and support professionals to the Adviser.
ACON Investments is an international private equity fund management company that was founded in
1996 by Messrs. Aronson, Brotman and Ginns. Since its inception, the Firm has managed, or has had
under management, approximately $5.5 billion in capital.2 ACON and its affiliated investment advisers
currently operate private equity funds and other investment vehicles in two primary lines of business: one
that targets middle-market companies primarily in the United States and the other that focuses on middle-
market transactions primarily in Latin America. ACON seeks to make control equity, protected minority
or structured equity transactions.3
The Adviser currently manages three private equity vehicles, ACON ABP II Capital, LLC, a Delaware
limited liability company formed in 2006 (“ABP II Capital”), ACON AEP III CAPITAL, L.L.C., a
Delaware limited liability company formed in 2011 (“AEP III Capital”) and ACON AEP IV Capital,
L.L.C., a Delaware limited liability company formed in 2015 and that commenced operations in 2016
(“AEP IV Capital”). Each of ABP II Capital, AEP III Capital and AEP IV Capital are referred to herein
as “ACON Investment Vehicles” or “Investment Vehicles.”
ABP II Capital was formed for the sole purpose of acquiring a limited partnership interest in Acon-
Bastion Partners II, L.P. (“ABP II”), a private equity fund managed by Acon Funds Management, L.L.C.
(SEC File No. 801-74407), an affiliate of ACON (“AFM”). AEP III Capital was formed for the sole
purpose of acquiring a limited partnership interest in ACON Equity Partners III, L.P. (“AEP III”), a
private equity fund managed by ACON EQUITY MANAGEMENT, L.L.C. (SEC File No. 801-74406),
an affiliate of ACON (“AEM”). AEP IV Capital was formed for the sole purpose of acquiring a limited
partnership interest in ACON Equity Partners IV, L.P. (“AEP IV”), a private equity fund also managed
by AEM. Each of AEM and AFM are referred to herein as “Related Advisers.” ACON may in the future
organize additional vehicles similar to the Investment Vehicles to invest in successor private equity funds
to ABP II, AEP III and AEP IV (each, an “Underlying Fund” and together, the “Underlying Funds”),
consistent with the terms of the agreements governing the operation and establishment of the Underlying
Funds and the Investment Vehicles.
1 Please refer to Schedules A and B to ACON’s Part 1 of Form ADV for information regarding ACON’s beneficial
owners and control persons.
2 Represents cumulative capital commitments in the Firm’s U.S. and Latin American private equity platforms since
ACON Investments’ inception in 1996 through March 31, 2019. Excludes co-investment capital invited by ACON
Investments to invest alongside, but not managed by, affiliates of ACON Investments.
3 See Item 10 (
Other Financial Industry Activities and Affiliations) for a list of the other ACON affiliated registered
investment advisers.
The Underlying Funds target making private equity investments in middle-market companies, principally
in the United States, with the objective of achieving long-term appreciation for their investors. ACON’s
and the Related Advisers’ investment strategy focuses on revenue growth and operational improvements
as one of the primary tools to achieve value creation. The Underlying Funds target equity and equity-
linked debt investments and other opportunistic investments, and aim to invest primarily in companies in
which ACON and its affiliates will have the right to control or exert significant influence over the
portfolio company’s strategic planning, operations and development. One or more representatives of
ACON and its affiliates typically participate as a member of the board of directors of each portfolio
company investment of the Underlying Funds and as a member of one or more board committees.
In addition to the private equity fund platform that the Adviser and the Related Advisers offer to investors
in the Underlying Funds as well as the Investment Vehicles, ACON and its affiliates (including other
registered affiliated investment advisers of ACON including the Related Advisers) also offer investors in
the Underlying Funds and the Investment Vehicles, prospective investors and third parties that are not
investors in the Underlying Funds or the Investment Vehicles, opportunities to co-invest alongside the
relevant Underlying Fund in investment opportunities identified by the Adviser and the Related Advisers,
whether through an ACON-sponsored (or Related Adviser-sponsored) Underlying Investment Vehicle (a
“Co-Invest Vehicle”) or directly into the underlying portfolio company. Co-Invest Vehicles typically
invest and divest at substantially the same time and on the same terms and conditions as the Underlying
Funds (subject to applicable tax, legal, regulatory, accounting and other similar considerations, and it
being understood that the Underlying Funds may have differing rights relating to board, committee or
other designations or governance, approvals, voting, veto, consultation and control). Often, a Co-Invest
Vehicle will also be an aggregation vehicle through which both the relevant Underlying Fund and the
various co-investors make their investment into the portfolio company.
Recipients of this Brochure should review and refer to the Form ADVs filed on behalf of each Related
Adviser, including without limitation the Part 2A Brochure filed by each Related Adviser (each, a
“Related Adviser Brochure” and together, the “Related Brochures”), because the ACON Investment
Vehicles feed into the Underlying Funds. Accordingly, disclosures and risks outlined therein apply to
investors in the ACON Investment Vehicles inasmuch as such investors are indirect investors in the
private equity funds described in the Related Brochures.
In addition, the Adviser is the owner of a newly established management company, ACON Southern
Europe Management, L.L.C. (“ASEM”). ASEM is a “Relying Adviser” and files a single Form ADV
with the Adviser. ASEM is under common control with the Adviser and was formed to manage one or
more Southern Europe-focused private equity vehicles through a joint venture arrangement with ACON
Southern Europe Advisory, SL, located in Madrid, Spain.
Types of Advisory Services Offered The Adviser provides investment advisory services to the Investment Vehicles, including identifying,
evaluating, structuring, recommending and negotiating investment acquisition and disposition
opportunities; identifying sources of financing for proposed investments; supervising the negotiation,
preparation and review of agreements and other documents in connection with investments, dispositions
and financings; and ongoing monitoring and management of portfolio company investments.
The relationship between ACON and each Investment Vehicle is governed by the U.S. Investment
Advisers Act of 1940, as amended (the “Advisers Act”), as well as the governing documents of each
Investment Vehicle (the “Investment Agreement”) and the terms of any investment advisory agreements
concluded between ACON and each Investment Vehicle. Because the Investment Vehicles feed into the
Underlying Funds, the terms of the investors’ investments in the Investment Vehicles are also governed
by the governing documents of the applicable Investment Vehicle (each an “Underlying Investment
Agreement” and when specifically referring to the Underlying Funds, the “Underlying Fund Agreements”) and the terms of any investment advisory agreements concluded between the Related
Advisers and each Investment Vehicle. Investments in the Investment Vehicles are privately offered only
to qualified investors that satisfy applicable eligibility and suitability requirements. The Investment
Vehicles are not registered under the U.S. Investment Company Act of 1940, as amended (the
“Investment Company Act”) and the limited partnership or other interests offered by such vehicles are
not registered under the U.S. Securities Act of 1933, as amended (the “Securities Act”). Certain ACON
personnel (including without limitation employees of ACON affiliates and the named “Principals” of each
Underlying Fund (hereinafter referred to as “Principals”) also invest (and often are required by investors
to invest) in the ACON Investment Vehicles, and as a result, their economic interests may be better
aligned with those of the investors.
In connection with the provision of advisory services to the Investment Vehicles, ACON or its affiliates
often enter into side letters or other writings (“Side Letters”) with certain investors, including investors in
the Investment Vehicles, which have the effect of establishing rights under, or altering or supplementing
the terms of, a vehicle’s Investment Agreement in respect of the investor to whom a Side Letter is
addressed. Side Letters provide the investor with economic, regulatory and other terms that are more
favorable than the terms offered to other investors. Side Letter provisions cover a broad variety of topics.
Examples of Side Letter provisions for the benefit of an investor include, without limitation, a waiver or
reduction of management and/or other fees/allocations (including differences in application of fee offset
provisions with respect to such investor), payment of reduced carried interest, the provision of additional
information or reports, rights related to specific regulatory requests of certain investors, more favorable
transfer rights, the ability to opt-out of certain investments, withdrawal rights due to adverse tax, investor
policy, regulatory or other events, consent rights to certain Investment Vehicle actions or Investment
Agreement or Underlying Fund Agreement amendments, priority and/or other rights with respect to the
review of co-investment opportunities (and the terms thereof) and rights to participate on a particular
ACON Investment Vehicle’s investor advisory committee. In addition, certain Side Letters with investors
contain provisions that economically incentivize ACON to offer co-investment opportunities to such
investors.
Services Tailored to Individual Needs of Clients ACON provides investment advice to the Investment Vehicles consistent with the terms of the Investment
Agreements and not individually to the investors in such vehicles.
Wrap Fee Programs Wrap fee programs are comprehensive fees charged by an investment adviser to a client for providing a
bundle of services, such as investment advice, investment research and brokerage services. ACON does
not participate in wrap fee programs.
Client Assets As of December 31, 2018, ACON had approximately $32.5 million of client assets under management, all
of which is managed on a discretionary basis.
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ACON and/or its affiliates generally receive a management fee in connection with advisory services.
From time to time, ACON and/or its affiliates receive additional compensation in connection with
management or other services performed for the portfolio companies of the Underlying Funds, as
described in detail below.
Management Fees
Generally
The Investment Vehicles pay ACON a management fee (the “Management Fees”) that generally
conforms to the management fees charged by the Underlying Fund. The precise amount of, and the
manner and calculation of, the Management Fees for each Investment Vehicle are established by ACON
through negotiations with investors in the applicable Investment Vehicle and are set forth in the
Investment Agreement for each vehicle. The amount of the Management Fees are typically reduced
following expiration of each Investment Vehicle’s commitment period or upon the closing of a successor
to the Underlying Fund. Management Fees are typically paid semi-annually or quarterly in advance and
are subject to waiver and/or offsets as more fully described below.
Principals or other current or former employees of the Adviser or its affiliates generally receive salaries
and other compensation derived from, and in certain cases including a portion of, the Management Fee,
carried interest or other compensation received by the Adviser or its affiliates.
Secondments, Operating Personnel and Consultants
See the Related Brochures for a discussion of ACON’s practices with respect to secondments, operating
personnel and consultants.
Co-Investment Vehicles
As described in the Related Brochures, affiliates of ACON offer co-investment opportunities alongside
the Underlying Funds. Co-investors may receive certain rights, as described more fully in the Related
Brochures. In addition, affiliates of ACON, including the Related Advisers, also may receive
management fees, carried interest and other fees in connection with such co-investment opportunities,
which economics create incentives that could affect how ACON affiliates allocate investment
opportunities or ultimately makes decisions with respect to management of portfolio companies. Investors
in the Investment Vehicles should carefully review the Related Brochures for disclosures regarding,
among other things, allocation of fees and expenses and fee offsets.
Management Fee Exemptions, Reductions and Waivers
The Adviser may exempt certain persons from payment of Management Fees or otherwise reduce the
Management Fees payable by certain investors, including without limitation ACON personnel, persons
with family or other relationships with the Adviser and its affiliates and unaffiliated parties, including
without limitation business associates, strategic partners, advisors, consultants and significant investors.
As permitted under each Investment Agreement, the Adviser may also waive or agree to reduce the
Management Fees in exchange for a credit towards the amount of capital the Underlying Fund Principals
and other ACON personnel would otherwise be required to contribute to each Underlying Fund. The
investors of the particular Underlying Fund may be required to make a
pro rata contribution according to
their respective commitments to fund any contribution that would otherwise have been required of ACON
personnel and Underlying Fund Principals in connection with any such waiver or reduction and, as a
result, the exercise of such waiver may result in an acceleration of investor capital contributions. Waived
or reduced Management Fees in these circumstances are not subject to the Management Fee offsets
described below and may be significant.
Other Fees Earned by ACON and Fee Offsets
Description of Fees
Affiliates of the Adviser may receive fee income paid by portfolio companies or other third parties,
including, for example: (i) monitoring fees, set-up fees, operational consulting fees or other fees; (ii) cash
and non-cash directors’ fees; and (iii) termination, break-up or other similar fees, payments or
compensation, in each case received in connection with investments or proposed investments of the
Underlying Fund and/or co-investors, or services provided in connection therewith (collectively, “Other
Fees”). Other Fees negotiated for by ACON also include accelerated portfolio company monitoring fees
in the event of a sale of a company prior to the expiration of the term of the applicable portfolio company
monitoring fee or management services agreement. Such accelerated monitoring fees may be calculated
based on expectations or estimates of future events and, accordingly, may be higher or lower than the
actual cost and/or amount of services provided and could negatively impact investor returns. In addition,
certain of these Other Fees may be calculated on the basis of estimated financial results of a portfolio
company over a particular time period, with no provisions requiring a true-up for actual financial results
over such time period.
Fee Offsets, Allocation and Other Considerations
The amount of Management Fees payable may be offset by at least a portion of Other Fees (net of related
expenses) received by ACON and its affiliates in connection with an investment made by a particular
Underlying Fund. Each Management Fee offset reduces Management Fees payable by direct and indirect
investors in an Underlying Fund. The portion of Other Fees received by ACON that reduce Management
Fees payable are disclosed in, and governed by, the Underlying Fund Agreements. If no subsequent
installments of Management Fees are due, then excess offset amounts will be returned to direct and
indirect investors upon liquidation of an Underlying Fund. Any balance not so shared is retained by
ACON (or affiliates) as additional revenue. For a description of the offset mechanism in each of the
Underlying Funds, including how affiliates of the Adviser handle allocation of Other Fees across multiple
vehicles, refer to the Related Brochures.
The right of ACON’s affiliates to receive Other Fees may create a conflict of interest between ACON and
its affiliates, on the one hand, and the various investment vehicles and their investors, on the other hand,
because the fees may be substantial and the investment vehicles and their investors do not have a direct
interest in the fees. ACON and its affiliates believe, however, that the Underlying Fund management fee
offset mechanism described in the Related Brochures (to the extent applicable) and the equity
commitments made by owners of the Adviser and other ACON personnel in the Underlying Funds and
other investment vehicles, significantly mitigates this potential conflict. In addition, ACON and its
affiliates believe this potential conflict is often further mitigated by the fact that Other Fees may become
limited as the result of negotiations involving third parties, such as with sellers, buyers, and management
teams or boards of directors of, or lenders to, portfolio companies.
Board Fees
Refer also to the Related Brochures for a discussion regarding treatment of director fees.
How Fees are Billed The Adviser causes the Management Fees due in respect of a particular Investment Vehicle to be paid to
ACON (or an affiliate thereof) by (i) requiring investors to make capital contributions, (ii) withholding
from investment proceeds that would otherwise be distributable to investors or (iii) in certain cases,
causing the Underlying Funds to borrow money (subject in each case to the terms of the respective
Underlying Fund Agreement).
Other Fees and Expenses The various types of fee income received by ACON are described above.
As feeder vehicles, investors in each of the Investment Vehicles are responsible for payment of expenses
charged by the Underlying Funds. Refer to the Related Brochures for a detailed description of the types
and nature of expenses that may be borne (both directly and indirectly) by the Underlying Funds (and
thus, indirectly, the Investment Vehicles), on the one hand, and affiliates of ACON, on the other hand. In
addition, the Adviser is permitted to set aside appropriate reserves for anticipated expenses and liabilities
of each of the Investment Vehicles prior to making distributions to investors. The Related Brochures also
provide details relating to the Adviser’s allocation methodology with respect to other fees and expenses,
which investors should review carefully.
Investors should review all of the types of fees and expenses charged by ACON, its GPs/Managers and
others to the respective ACON Investment Vehicles to determine the total amount of fees and expenses to
be paid by these vehicles and, indirectly, their investors.
Refunds for Fees Charged in Advance Management Fees typically are paid in advance. The terms of the ACON Investment Vehicles (which are
closed-end vehicles) do not generally contemplate a return of fees to investors to the extent that ACON’s
services terminate prior to the end of the relevant payment period, except that at the end of the term of
each Investment Vehicle, the Management Fees are due in advance only for the applicable
pro-rated
partial period.
Compensation for Sales of Securities Neither ACON nor any of its supervised persons accept compensation for the sale of securities or other
investment products, including asset-based sales charges or service fees from the sale of mutual funds.
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Not applicable. However, investors should review and refer to the Related Brochures for a description of
the carried interest that affiliates of ACON, and investment professionals thereof, may receive in
connection with investments made by the Underlying Funds, as well as potential conflicts that arise with
respect to side-by-side investing, allocation of co-investment opportunities, and non-cash distributions.
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ACON provides investment advisory, management and administrative services to the Investment Vehicles
only. Investment advice is not provided individually to the investors in such vehicles.
The Investment Vehicles are pooled investment vehicles formed under domestic laws and operated as
exempt investment pools under the Investment Company Act. The investors participating in Investment
Vehicles may include, among others, a broad range of U.S. and non-U.S. investors, including without
limitation high net worth individuals, trusts, estates or charitable organizations and other investment
entities, corporations and business entities, and may include, directly or indirectly, ACON personnel. On
occasion, ACON may also offer investment opportunities to other qualified institutions and individuals
(for example, executives of present or former portfolio companies). Details concerning applicable
investor suitability criteria are set forth in the respective private placement memoranda and subscription
materials for the Investment Vehicles.
ACON may impose a minimum investment commitment for investors in Investment Vehicles, however
this minimum may be waived in ACON’s sole discretion.
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Methods of Analysis and Investment Strategies
The Adviser’s investment strategy on behalf of each Investment Vehicle is to seek to increase the value
of, and to find desirable exit opportunities for, the investments made by each such Investment Vehicle.
This strategy may involve the use of information generated by individuals or entities not affiliated with
ACON or its affiliates. Sources of such information include, but are not limited to, research provided by
institutions and the brokerage community, internally and externally generated analysis of potential
opportunities, specialized consultants, industry experts, and industry and trade publications, as well as
direct contact with management of potential portfolio companies and related due diligence.
ACON generally follows an investment process which seeks to: (i) subject potential transactions to a
multi-stage screening process with certain hurdles at each stage; (ii) institute the appropriate controls and
monitoring mechanisms to facilitate the ability of ACON’s investment professionals to add value to the
investments made by the Investment Vehicles; and (iii) maximize the value of investments upon exit.
Risks The ACON Investment Vehicles make investments into Underlying Funds that in turn make investments
in middle-market companies the primary operations of which are typically within the United States.
Certain of the risks related to this investment strategy are summarized below. There are significant risks
and potential conflicts of interest in investing in private securities issued by middle-market companies.
Prospective investors should carefully consider all of the risks related to investing in the ACON
Investment Vehicle that are set forth in the private placement memorandum or other offering document (if
applicable) for the Underlying Fund, including those discussed below. Investors should also carefully
review the Risks set forth in the Related Brochures. The investment track records of the members of
ACON’s investment management team provide no assurance of future results for ACON Investment
Vehicles.
Private equity-related investments generally. All securities investments risk the loss of capital.
Investments in Investment Vehicles are speculative and involve a high degree of risk. Investments with
ACON should be undertaken only by investors that have the financial sophistication and expertise to
evaluate the merits and risks of an investment in such vehicle and for which the Investment Vehicle does
not represent a complete investment program. There can be no assurance that any Investment Vehicle will
meet its investment objectives or otherwise be able to carry out its investment program successfully or
that an investor will receive a return of its capital contributed to the Investment Vehicle. In addition, there
can be no assurance that any Investment Vehicle will be able to generate returns for investors or that
returns will be commensurate with the risks of the Investment Vehicle’s investments. Investment in any
Investment Vehicle should only be made by investors that can afford a loss of their entire investment.
Prospective investors should consult their own legal, tax and/or financial advisors prior to investing in an
Investment Vehicle.
Business risks. The investment portfolio of an ACON Investment Vehicle 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.
Investment in junior securities. The securities in which an ACON Investment Vehicle 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 Vehicle’s investment once made.
Limited transferability of ACON Investment Vehicles’ interests. There will be no public market for the
ACON Investment Vehicles interests, and none is expected to develop. There are substantial restrictions
upon the transferability of ACON Investment Vehicle interests under the Investment Agreements and
applicable securities laws. In general, withdrawals of ACON Investment Vehicle interests are not
permitted. In addition, such interests are not redeemable. Interests in the ACON Investment Vehicles are
not registered under the Securities Act, the securities laws of any U.S. state or the securities laws of any
other jurisdiction, and therefore, cannot be resold or transferred unless registered under the Securities Act
(and other applicable securities laws) or an exemption from registration is available.
Certain Conflicts of Interest
ACON, its affiliates and its related entities engage in a broad range of advisory and non-advisory
activities, including investment activities for their own account and for the account of other Investment
Vehicles and providing transaction-related, investment advisory, legal, management and other services to
Investment Vehicles and their respective portfolio companies. Accordingly, various potential and actual
conflicts of interest will arise from time to time with respect to the overall investment activities of the
GPs/Managers and their affiliates, including other ACON Investment Vehicles and their respective
portfolio companies. The following briefly summarizes some of these conflicts, but is not intended to be
an exclusive list of all such conflicts. For purposes of this section, (i) “ACON Personnel” shall mean
partners, members, shareholders, officers, directors, managers and employees of ACON, and (ii) all
references to ACON will be deemed to include ACON Personnel unless the context otherwise requires.
Reliance on ACON and portfolio company management. Control over the operation of each ACON
Investment Vehicle will be vested with ACON, and such vehicle’s future profitability will depend largely
upon the business and investment acumen of ACON and the ACON Principals. The loss or reduction of
service of one or more of the ACON Principals could have an adverse effect on an ACON Investment
Vehicle’s ability to realize its investment objectives. In addition, ACON currently, and will in the future,
manage other investment funds and vehicles besides the ACON Investment Vehicles and the ACON
Principals will need to devote substantial amounts of their time to the investment activities of such other
funds and vehicles, which is expected to pose conflicts of interest in the allocation of the time of such
investment professionals. The other funds may include predecessor funds, successor funds and funds
focused on other geographies or on other asset classes within the geographic regions in which ACON
invests. Investors generally have no right or power to take part in the management of an ACON
Investment Vehicle, and as a result, the investment performance of an ACON Investment Vehicle will
depend on the actions of ACON. In addition, certain changes in ACON or circumstances relating to
ACON may have an adverse effect on an Investment Vehicle or one or more of its portfolio companies
including potential acceleration of debt facilities.
Although ACON will monitor the performance of each ACON Investment Vehicle investment, it will
primarily be the responsibility of each portfolio company’s management team to operate such portfolio
company on a day-to-day basis. Although an ACON Investment Vehicle generally intends to invest in
companies with strong management or recruit strong management to such companies, there can be no
assurance that the management of such companies will be able or willing to successfully operate a
company in accordance with an Investment Vehicle’s objectives. Additionally, portfolio companies will
need to attract, retain and develop executives and members of their management teams. The market for
executive talent is, notwithstanding general unemployment levels or developments within a particular
industry and/or geography, extremely competitive. There can be no assurance that portfolio companies
will be able to attract, develop, integrate or retain suitable members of their management teams and, as a
result, an ACON Investment Vehicle and its investments may be adversely affected.
Lack of management rights. Investors generally will have no opportunity to control the day-to-day
operation, including, but not limited to, investment and disposition decisions, of the Investment Vehicles,
and will be permitted to vote only in the limited circumstances set forth in the Investment Agreements.
Investors will not make decisions with respect to the selection, management, disposition or other
realization of any investment, or any other decisions regarding the Investment Vehicles’ business and
affairs. In order to safeguard their limited liability for the liabilities and obligations of the Investment
Vehicles, investors must rely entirely on ACON and its GPs/Managers to conduct and manage the affairs
of the Investment Vehicles.
Side letters and opt-out rights. As described above, the Investment Vehicles, ACON and its
GPs/Managers routinely enter into written agreements, or Side Letters, with certain investors, including
ACON Personnel. These Side Letters provide investors with customized terms, which results in
preferential treatment or could economically incentivize ACON to provide preferential treatment, with
respect to, among others: (i) the fee structure, including reduced Management Fees, modified waterfall
mechanics and/or reduced Carried Interest; (ii) the ability to opt-out of certain types of investments
(including with respect to investments in certain geographies and/or industries); (iii) the reporting
obligations of the particular Investment Vehicle; (iv) the right to transfer interests in the applicable
Investment Vehicle; (v) the offering of co-investment opportunities; (vi) the right to withdraw from the
applicable Investment Vehicle in the event of adverse tax or regulatory events or violations of law or
policies; (vii) additional confidentiality protections; (viii) the right to disclose certain information to
underlying investors or to the public; (ix) structuring rights with respect to certain types of investments;
(x) modification of default remedies; (xi) prior review of an ACON Investment Vehicle’s investment
opportunities; (xii) investment pacing restrictions; or (xiii) certain other terms whether economic,
procedural or otherwise. Furthermore, the Adviser or its affiliates have permitted, and may in the future
permit, certain ACON Personnel, business associates and “friends and family” of ACON to invest directly
or indirectly in Investment Vehicles on terms that are more favorable than those offered to other
investors, including with respect to the non-payment or reduction in payment of Management Fees and
Carried Interest or different treatment with respect to fee offsets. If the Adviser or an affiliate thereof
enters into a Side Letter entitling an investor to opt out of a particular investment (including one or more
significant investors with geographic-specific opt-outs) or withdraw from the Investment Vehicle or
allowing such investor to be excused from particular investments, any election to opt out (including by
one or more significant investors with geographic- or industry-specific opt-outs) or withdraw by such
investor would correspondingly increase the interest that other investors will have in that particular
geography, industry or investment (in the case of an opt-out) or all future investments (in the case of a
withdrawal). In addition, in the case of an opt-out election, depending upon the specific terms of the
Investment Agreement (which may call for future capital contributions to be based on unfunded
commitments rather than aggregate commitments), the election may decrease the interest that other
investors will have in subsequent investments. Conversely, in the case of an opt-out election where the
specific terms of the Investment Agreement call for future capital contributions to continue to be based on
capital commitments, the election of one or more investors to opt-out of a particular transaction or
transactions will result in reducing the overall size of the Investment Vehicle, which may have a material
adverse effect on the vehicle and its investment prospects.
Diverse investor group may have conflicting interests. Prospective investors also should be aware that
conflicting investment, tax and other interests and circumstances may exist among the investors in
connection with an ACON Investment Vehicle’s activities. For example, the investors are expected to
include taxable and tax-exempt entities and persons and may include persons or entities organized in
various jurisdictions. The conflicting interests of individual investors may relate to or arise from, among
other things, the nature of investments made by an ACON Investment Vehicle, the structuring or the
acquisition of investments and the timing of disposition of investments, investments by such investors in
other ACON Investment Vehicles and the ability and desire to consummate co-investment opportunities.
As a consequence, conflicts of interest may arise in connection with decisions made by ACON regarding
an investment (including with respect to the nature or structuring of investments of an ACON Investment
Vehicle) that may be more beneficial for one type of investor than for another, including investors
affiliated with ACON, and especially with respect to tax matters, and which create conflicts of interests.
In selecting and structuring investments appropriate for an ACON Investment Vehicle, ACON will
consider the investment and tax objectives of such vehicle, the GP/Manager and the investors as a whole,
not the investment, tax or other objectives of any investor individually.
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Registered investment advisers are required to disclose all material facts regarding any legal or
disciplinary events that are material to a client’s or prospective client’s evaluation of the adviser’s
business or the integrity of its management. ACON does not have any legal or disciplinary events to
report.
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Broker-Dealers Neither ACON nor any of its management persons are registered, or have an application pending to
register, as a broker-dealer or a registered representative of a broker-dealer.
Futures and Commodity Trading Neither ACON nor any of its management persons are registered, or have an application pending to
register, as a futures commission merchant, commodity pool operator, a commodity trading advisor, or an
associated person of the foregoing entities.
Material Relationships Some of the key management executives and investment professionals of ACON, as well as the Chief
Financial Officer, Chief Operating Officer, General Counsel, Chief Compliance Officer and other
employees and/or consultants of ACON and its affiliates serve in similar capacities for the following
affiliates of ACON that are also registered investment advisers:
• Acon Funds Management, L.L.C. (SEC File No. 801-74407);
• ACON LatAm Management, L.L.C. (SEC File No. 801-74408); and
• ACON EQUITY MANAGEMENT, L.L.C. (SEC File No. 801-74406).
The Adviser is party to an arrangement with ACON Investments, a service affiliate, pursuant to which
ACON Investments and/or its affiliates provide the services of various private equity fund investment,
finance, accounting, tax, investor relations, legal, compliance and support professionals to the Adviser. In
addition, through this arrangement, certain administrative services including the payment of payroll,
benefits and overhead costs are provided to shared employees and facilities.
Other Investment Advisers ACON does not recommend or select other investment advisers for the Investment Vehicles. However, it
may, as described above, sub-contract certain services to its affiliates.
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Code of Ethics ACON and its affiliates have adopted a Code of Ethics (the “Code”) to ensure that ACON fulfills its
fiduciary requirements to the Investment Vehicles and to identify, address and avoid potential conflicts of
interest which exist when providing advisory services to these vehicles. The Code requires that personnel
of ACON comply with all applicable provisions of federal securities laws. The Code includes policies and
procedures related to the disclosure and pre-clearance of certain trading activity. The policy also
addresses confidentiality (with appropriate exceptions for whistleblowing) and insider trading and
expressly prohibits personnel from disseminating material non-public information or using such
information inappropriately for the benefit of any party. Personnel are required to provide written
certification as to their compliance with the Code on an annual basis.
ACON will provide a copy of its Code of Ethics to any client or prospective client upon request. Please
contact Teresa Y. Bernstein, Chief Compliance Officer, at 202-454-1100 x771 or
[email protected]. Participation or Interest in Client Transactions From time to time, consistent with each Investment Vehicle’s investment objectives and subject to
satisfaction of the policies and procedures set forth in the Code, the Investment Vehicle’s Investment
Agreements and applicable law, ACON or its GPs/Managers may recommend that an Investment Vehicle
acquire or sell securities in which an ACON related or affiliated person has a pre-existing direct or
indirect interest, and the Adviser or its GP/Manager may cause the Investment Vehicle to effect the
recommended transaction. A potential conflict of interest could arise in that the interested ACON related
person could benefit from such a purchase or sale of the applicable security by the Investment Vehicle.
The Code, however, is designed to identify and manage conflicts of interest to the extent they arise in
connection with such transactions, and to ensure that ACON fulfills its role as a fiduciary to the
Investment Vehicles. In particular, the Code requires that ACON act in the best interests of the
Investment Vehicles, in good faith and in an ethical manner. Certain terms of each Investment Vehicle’s
Investment Agreements (including for example the possible need for investor advisory committee
approval) and the equity participation of ACON investment professionals in the Investment Vehicle
further mitigate such conflicts.
Personal Trading From time to time, subject to satisfaction of the policies and procedures set forth in the Code, the
Investment Vehicles’ Investment Agreements and applicable laws, an ACON related person may acquire
or sell securities that are recommended to an Investment Vehicle or in which the Investment Vehicle has a
pre-existing direct or indirect interest. A potential conflict of interest could arise in that the interested
ACON related person or affiliate could benefit from the Investment Vehicle’s ownership, or subsequent
sale, of the applicable security. However, the Code is designed to identify and manage conflicts of interest
to the extent they arise in connection with the personal securities transactions and other investment
activities of ACON related persons, and to ensure that ACON fulfills its role as a fiduciary to each
Investment Vehicle. In particular, the Code requires that ACON related persons abide by policies and
procedures in connection with their personal securities trading activities, and such activities are monitored
under the Code to ensure compliance with such policies and procedures.
Personal Trading Contemporaneous with Client Transactions From time to time, in appropriate circumstances and subject to satisfaction of the policies and procedures
set forth in the Code and each Investment Vehicle’s governing documents, ACON personnel and other
related persons or affiliates will co-invest in the investments made by Investment Vehicles generally at
the same time as and on a side-by-side basis with Investment Vehicles (including their investors). ACON
does not believe that this common industry practice gives rise to material conflicts of interest, and that
certain potential conflicts of interest are addressed by the Code and the Investment Vehicle’s Investment
Agreements. However, because ACON personnel may have the opportunity to select the particular
investments in which they may choose to participate (and the amount of their participation), the ACON
investment professionals will sometimes have personal and financial motivations with respect to a
particular transaction that may not necessarily be aligned with investors in the Investment Vehicles.
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ACON primarily invests in private securities and does not regularly engage in high volume trading of
public securities. Accordingly, ACON is generally not in a position to select a broker-dealer for any
Investment Vehicle’s transactions.
ACON may distribute securities to investors in an Investment Vehicle or sell such securities, including
through using a broker-dealer if a public trading market exists. ACON may also sell securities in an
Investment Vehicle through privately negotiated transactions with or without the use of brokers or
dealers. If ACON or one of its affiliates sells publicly traded securities for the Investment Vehicle, they
are responsible for directing orders to broker-dealers to effect securities transactions for managed
accounts. ACON will select brokers on the basis of best price and execution capability. ACON has no
duty or obligation to seek in advance competitive bidding for the most favorable commission rate
applicable to any particular client transaction or to select any broker on the basis of its purported or
“posted” commission rate, but will endeavor to be aware of the current level of the charges of eligible
brokers and to minimize the expenses incurred for effecting client transaction to the extent consistent with
the interests and policies of the accounts. Although ACON generally seeks competitive commission rates,
ACON will not necessarily pay the lowest commission or commission equivalent. Transactions may
involve specialized services on the part of the broker involved and thereby entail higher commissions or
their equivalents than would be the case with other transactions requiring more routine services.
ACON does not have any soft dollar arrangements.
ACON does not engage third-party solicitors, however the Underlying Funds, or affiliates thereof, may do
so from time to time. However, such third-party solicitors are not used as broker-dealers to effect
transactions in publicly traded securities on behalf of any Investment Vehicle.
If ACON sells a publicly traded security for multiple Investment Vehicles, trades with a particular broker
on the same day will generally be averaged across client accounts if determined by ACON to be fair and
reasonable under the circumstances.
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Periodic Review of Client Accounts The investments made by the Investment Vehicles are generally private, illiquid and long-term in nature.
Accordingly, the review process is not directed toward a short-term decision to dispose of securities.
However, ACON’s personnel monitor and review companies in which an Investment Vehicle invests
including, for example, by participating in board meetings and management calls, reviewing annual and
interim financial statements, determining fair valuations quarterly, and making on-site visits to such
companies. Each Investment Vehicle’s financial statements are maintained and monitored by the ACON
Investments finance staff under the supervision of the Chief Financial Officer. In addition, financial
statements for the Investment Vehicles are audited on an annual basis by an independent third-party
accounting firm.
Factors that Trigger a Review of Client Accounts ACON investment professionals regularly supervise and monitor the investment activities of the
Investment Vehicles. In addition, the investment committees of each of the Related Advisers regularly
supervise and monitor the investment activities of the Underlying Funds.
Reports to Clients Audited financial statements are provided to investors in the Investment Vehicles generally within 120
days of the end of the vehicles’ fiscal year. Unaudited financial statements and investor-specific account
statements are generally provided within 45-60 days of the end of the vehicles’ fiscal quarter, along with
information about the financial performance of the companies in which the Investment Vehicle has,
indirectly through the Underlying Funds, invested.
Certain investors in an Investment Vehicle may request information relating to the Investment Vehicle
and, to the extent such information is readily available or may be obtained without unreasonable effort or
expense, ACON generally will provide such investors with the information requested. Investors that
request and receive such information will consequently possess information regarding the business and
affairs of the Investment Vehicle that may not be known to other investors. As a result, certain investors
may be able to take actions on the basis of such information which, in the absence of such information,
other investors may not take.
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In connection with managing investments, ACON may have, or may be deemed to have, custody of
certain funds or securities of the Investment Vehicles. Rule 206(4)-2 (the “Custody Rule”) of the
Advisers Act defines custody as holding client securities or assets or having any authority to obtain
possession of them, including the authority to withdraw funds or securities from a client’s accounts or
ownership of or access to client funds or securities (such as through fee deductions). With the exception
of certain assets, which are defined as “privately offered securities” under the Custody Rule, the assets of
certain Investment Vehicles are held in custody by unaffiliated broker/dealers or banks acting in the
capacity as “qualified custodians.”
In accordance with the Custody Rule, ACON’s Chief Compliance Officer is responsible for ensuring that
the Investment Vehicles’ securities, other than “privately offered securities,” are held only with
unaffiliated broker-dealers or banks acting as qualified custodians. ACON’s Chief Compliance Officer is
also responsible for arranging for annual independent audits of the Investment Vehicles by a major
accounting firm within 120 days of each vehicle’s fiscal year end and for obtaining audited financial
statements prepared in accordance with generally accepted accounting principles in the United States.
ACON generally arranges for the delivery of such audited financial statements to investors within 120
days of each vehicle’s fiscal year end.
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Typically, ACON provides investment advice to the Investment Vehicles on a discretionary basis
pursuant to each Investment Vehicle’s Investment Agreement and subject to the investment guidelines set
forth therein.
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ACON accepts authority to vote the securities held by the Investment Vehicles. In accordance with SEC
rules, ACON and its affiliates have adopted Proxy Voting Policies and Procedures (the “Proxy Policy”)
to address how they votes proxies for the Investment Vehicles’ portfolio investments. The Proxy Policy
seeks to ensure that ACON votes proxies (or similar instruments) in the best interest of the Investment
Vehicle, including when there may be material conflicts of interest in voting proxies. The Adviser and its
GPs/Managers generally believe their interests are aligned with the Investment Vehicles through their
ownership interest in the Investment Vehicles. In the event, however, there is or may be a conflict of
interest between the Adviser and an Investment Vehicle in voting proxies, the Adviser may address the
conflict using several alternatives, including by seeking the approval or concurrence of the Investment
Vehicle’s investor advisory committee (or that of the Underlying Fund) on the proposed proxy vote or
through other alternatives set forth in the Proxy Policy. In addition, the Proxy Policy sets forth certain
specific proxy voting guidelines ACON and its affiliates follow when voting proxies on behalf of the
Investment Vehicles. Upon request, an investor may obtain a copy of ACON’s Proxy Voting Policy as
well as information about how ACON voted any proxies on the Investment Vehicles’ behalves by
contacting the Chief Compliance Officer, Teresa Y. Bernstein, at 202-454-1100 x771 or
[email protected].
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Fees are not collected six months or more in advance. Accordingly, ACON has no disclosures related to
this item.
ACON is not aware of any financial condition that is reasonably likely to impair its ability to meet
contractual commitments to the Investment Vehicles.
ACON has never been the subject of a bankruptcy petition.
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