Private Equity & Investment Management
At Troutman Sanders, our attorneys in the Private Equity & Investment Management practice area represent private equity funds and other investment funds investing in a variety of asset classes, acquiring, among other things, portfolio companies, equity and debt securities, and real estate. We also advise companies being acquired by or seeking capital from such funds. We also regularly represent private equity funds and other investment funds and their general partners, limited partners and co-investors with respect to fund formation issues and equity sponsor issues throughout the life of their funds. We are experienced in helping such clients address a comprehensive range of fund matters, from the formation of fund entities through the negotiation of fund terms and closing of the fund.
Fund Formation
Our attorneys have significant experience in drafting and revising documentation related to the formation of private equity funds and other investment funds, including the private placement memorandum; the limited partnership agreement or other constituent document of the fund; all documentation related to management of the fund and governance of the general partner or manager; side letters with investors; documents required for any parallel funds or alternative investment vehicles; and appropriate closing documentation. Our attorneys focus on drafting these documents to concisely implement the economic bargain among the fund’s investors and its sponsors. We typically draft such documentation and perform our regulatory work with a view to rendering appropriate legal opinions for the benefit of the fund if requested.
We have significant experience forming and working with offshore investment funds in order to, among other things, establish tax positive structures that benefit both the fund’s investors and its sponsors. We oversee the entire formation and offering process, and coordinate closely with qualified offshore counsel to ensure that all of a fund’s offering documentation complies with the applicable securities and other regulatory laws of the jurisdiction of formation and that the structure is as tax efficient as possible for all involved.
In providing fund formation advice and drafting documentation, we have worked with direct funds, fund-of-funds and parallel funds. In working with such funds, we pride ourselves on our business sense, availability, responsiveness and the consistent quality of the efficient and cost-effective services we provide. Our partners stay involved in the day-to-day interaction with the client and are available consistently to resolve issues and accelerate progress toward completing each aspect of the fund formation process. This level of partner involvement is intended to ensure that our efforts are results-oriented.
Fund Sponsors and Investors
It is important to note that fund sponsors who have engaged our lawyers have greatly benefited from our familiarity with investor and fundraising market issues and sensitivities. This market familiarity is a salient feature of our fund practice and is primarily the result of our continuous representation of institutional investors investing in funds with worldwide portfolio investments. Fund investors that we represent include: pension plans, financial institutions, foreign entities and individuals, insurance companies, charitable organizations, high net worth individuals and family businesses.
As a result of the work performed for such clients, our lawyers have honed their ability to analyze and review private investment fund terms from an investor perspective. In addition, representation of such investors has enabled our attorneys to develop a practical approach to fund documentation, and has enabled our clients to market and close substantial funds despite difficult fundraising market conditions. Private investment fund clients have found that this experience is of significant value as they evaluate side letter proposals with respect to their funds. In this regard, our work with a wide variety of private investment funds has enabled our attorneys to correctly advise fund sponsors as to market terms and practices and the customary range of solutions to issues that are important to investors. Specifically, we have up-to-date knowledge of current side letter provisions; the trend toward increased disclosure of fund results; preferred return, management fee and carry terms and calculations; and investor demands for greater protection for clawback claims. In short, our frequent contact with fund investors has ensured that we are always current with the variety of innovative provisions introduced by investment funds and institutional investors.
Our attorneys have also worked closely with the fund sponsors to document their relationship with the fund. When working with fund sponsors, we recognize that it is very important when establishing a fund to structure the participation by the fund principals and other insiders to maximize their after-tax returns and to align their interests with fund objectives. We have extensive experience in creating complex investment programs, leveraged co-invest programs, and other tax advantaged and estate-planning investment structures for principals of the fund sponsor, as well as for officers and employees of the sponsor and financial institutions affiliated with the sponsor.
Portfolio Investments
Our attorneys also have extensive experience assisting fund clients in connection with portfolio investments and other investment strategies, including the acquisition of both public and private companies, equity and debt securities, and real estate. These transactions, depending on the nature of the fund investments, often call on the expertise of a variety of our leading practice groups and industry experts. In assisting clients with the acquisition and divesture of portfolio companies or other investments, our attorneys have a solid track record of successfully negotiating optimal terms, implementing highly sophisticated structures and meeting the tightest closing schedules, helping our private investment fund clients succeed in today’s competitive market.
While we often represent the private investment fund sponsor in acquisition transactions, we also have significant experience in representing management teams, the board of directors, mezzanine investors and financial advisers in leveraged transactions. In this regard, Troutman Sanders has extensive experience in representing mezzanine investors, who are typically providing mezzanine financing to enhance a borrower’s capital structure and support its growth plans or as part of a complex financial transaction, such as a leveraged buyout or recapitalization. Mezzanine investors have noted that we are highly skilled at drafting and negotiating the necessary transaction documentation, including “equity kickers” in the form of warrants or preferred stock. Our attorneys also have significant experience in advising on subordination and other arrangements with senior lenders and, as a result, are able to counsel clients on current market practices in this area.
Regulation
On the regulatory front, we advise our private investment fund clients with respect to securities laws, corporate, CFTC, tax and ERISA issues and other applicable laws, rules and regulations in connection with the structuring and offering of private investment funds. Specifically, we have helped our fund clients ensure compliance with Regulation D (including providing advice with respect to compliance with the prohibition on general solicitation); state blue sky laws; the Investment Company Act of 1940; the Investment Advisers Act of 1940; the Securities Exchange Act of 1934 (including broker dealer regulations); ERISA; Regulation S and other regulations relating to simultaneous United States offerings and offshore offerings; the Gramm-Leach-Bliley Financial Services Modernization Act of 1999; the Patriot Act of 2001 (anti-money laundering compliance); and NASD regulations.
Our Team
Our private equity and investment management attorneys include members of the Mergers and Acquisitions Practice Group, the Securities and Corporate Governance Practice Group, as well as members of our Real Estate, Employment, Tax and other specialty groups. These attorneys work together as a team to produce creative and efficient solutions for our clients.
The breadth, depth, and diversity of our fund practice gives us a broad knowledge of the market terms, trends and emerging issues that are important to our private investment fund clients. Among our clients are leading institutional investors and "gatekeepers" for private investment funds, which enables us to anticipate major issues and investor initiatives and structure market-tested solutions. Our lawyers not only possess outstanding legal qualifications, but also have significant practical and recent experience in structuring and negotiating the terms of private equity funds.