BarbriSFCourseDetails
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Course Details

Course Information
  • smart_display Format

    On-Demand

  • signal_cellular_alt Difficulty Level

  • work Practice Area

    Banking and Finance

Date & Time
  • event Date

    Thursday, November 19, 2020

  • schedule Time

    1:00 p.m. ET./10:00 a.m. PT

  • timer Program Length

    90 minutes

Credit Information

  • This 90-minute webinar is eligible in most states for 1.5 CLE credits.

$347.00
CLE
ALL

This CLE course will provide private equity counsel with guidance on drafting and negotiating fees and expenses provisions in investment fund agreements. The panel discussion will include current trends in deal terms as revealed in the 2020 Fees and Expenses Benchmarking Survey (the Survey). The Survey is to be published by Private Funds CFO in Nov 2020 and Troutman Pepper was an influential contributor to the project.

Faculty

Julia D. Corelli
Partner
Troutman Pepper Locke LLP

Ms. Corelli is a member of the firm’s Corporate, Private Fund Services and Private Equity Practice Groups. She concentrates in private investment fund formation, operations and compliance, private equity investment transactions, venture capital investments, acquisitions, dispositions and financings of business enterprises, joint ventures, and intra-partner dealings. Ms. Corelli also is experienced in matters of investment fund principal compensation and succession planning and serves as general outside counsel to family offices.

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Patrick J. Bianchi
Attorney
Troutman Pepper Locke LLP

Mr. Bianchi is a member of the firm’s Corporate, Private Fund Services and Emerging Growth and Venture Capital Practice Groups. He regularly represents emerging growth companies and investors in such companies in various corporate and securities transactions. Mr. Bianchi maintains particular expertise in the formation and operation of private equity investment partnerships, including partnership terms, securities laws matters and other regulatory considerations. His experience includes venture capital financings, private and public securities offerings, mergers and acquisitions and corporate governance matters.

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Description

When sponsors and investors negotiate the terms of an investment fund agreement, the treatment of various fees and expenses is often a much-negotiated issue. From fund design through regulatory review and enforcement, the costs borne by an investment fund are a point of intense focus. The treatment in fund LPAs of fees and expenses at the fund's inception is often determinative of the success of a regulatory exam down the road.

Investors demand full disclosure of fees and expenses in the agreement. They will measure compliance with that disclosure throughout the life of the fund, often requiring annual confirmation that the fund has not exceeded the bounds of the LPA in that regard. There is always the threat of regulators examining expense records and comparing them to the disclosures in the fund's offering documents.

In response to investors' desire for greater transparency, and the regulatory push for more upfront disclosure, expense provisions in fund governing documents are getting longer and more detailed. They must address investment evaluation expenses, marketing costs, expenses associated with monitoring investments, broken deal expenses, treatment of co-investors, calculation of transaction and management fees, and reporting obligations and other operating costs, among many others.

The Survey took a deep dive into many expense issues and shed some light on how they are allocated between sponsors and investors.

Listen as our authoritative panel discusses the current thinking on fund fees and expenses, as indicated in the 2020 Survey. The panel will also provide guidance in the drafting of fees and expenses provisions and discuss best practices in disclosure and reporting to minimize the risk of regulatory scrutiny.

Outline

  1. Fees and expenses generally
    1. Transaction fees
    2. Management fees
    3. Breakup fees
    4. Regulatory concerns
  2. Trends in recent fund agreements: 2020 survey
    1. Greater disclosure
    2. Expenses charged to co-investors
    3. Break-up fees
    4. Capping of fund fees
    5. Regulatory costs
  3. Implications of reduced fees payable to sponsor

Benefits

The panel will review these and other key issues:

  • Why are fees and expenses such a contentious issue between sponsors and investors? Which are the most sensitive?
  • What are the most significant trends revealed by the 2020 Fees and Expenses Benchmarking Survey about fees, expenses, and reporting?
  • How have transaction and management fees evolved?
  • What are the chief concerns for co-investors about fees and expenses?