Negotiating Private Equity Fund Terms: Key Provisions, Emerging Trends and Recent Developments
Waterfall Provisions, GP Removal Rights, Standard of Care
Course Details
- smart_display Format
On-Demand
- signal_cellular_alt Difficulty Level
- work Practice Area
Banking and Finance
- event Date
Tuesday, March 28, 2023
- schedule Time
1:00 p.m. ET./10:00 a.m. PT
- timer Program Length
90 minutes
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This 90-minute webinar is eligible in most states for 1.5 CLE credits.
This CLE course will examine current trends and hot issues in private equity fund terms and best practices for structuring and negotiating fund document terms for private equity sponsors and limited partner (LP) investors.
Ms. Schwartz focuses her practice on the structuring, formation and operation of private equity funds, including buyout funds, venture capital funds, mezzanine funds, distressed funds and real estate funds. She represents both fund sponsors and investors in her practice. In addition to assisting fund sponsors with their internal management arrangements, succession planning and the creation of internal investment and co-investment vehicles, she has extensive experience with institutional investors and regularly advises clients on market terms of investment funds. She also advises private equity funds in connection with their investments in, and disposition of, portfolio companies and the establishment of capital call credit lines.
Mr. Pergler concentrates his practice on representing fund sponsors in the formation and management of private investment funds, including buyout, venture capital, mezzanine, senior debt, funds-of-funds and other investment vehicles and separate accounts, as well as the operational and legal issues faced by their sponsors. In addition, Mr. Perfler counsels prominent institutional investors in connection with their investments in leading private equity, venture, real estate and hedge funds.
Hot button topics in negotiating private equity fund terms include LPs requirements for "no-fault divorce" and more expansive "for cause" rights to terminate the general partner (GP) of the fund. LPs are also increasingly focusing on the standard of care for GP actions and the scope of the GP's fiduciary duties to the fund, as well as limitations on GP rights to indemnification from the fund.
LP investors continue to push for European-style "whole fund" waterfalls in which carried interest is calculated and paid at the fund-wide level.
In line with increased SEC scrutiny over how expenses are allocated, LP investors are increasingly focusing on provisions in fund documents regarding expense allocation practices among the management company, the fund, and any co-investment vehicles, separate accounts, and other investment vehicles managed by the management company, particularly concerning "broken deal" expenses. Management fee offsets of transaction fees and approval rights concerning affiliate transactions are also topics of interest for LP investors.
LP investors have shown a continuing interest in co-investments with private equity funds.
Listen as our authoritative panel of finance practitioners analyzes current trends in PE fund terms and best practices for sponsors and investors in structuring and negotiating agreement provisions.
- "No-fault divorce" and termination rights
- Indemnities
- General partner standard of care
- Carried interest and clawback mechanisms
- Conflicts and transaction fees
- Co-investments
The panel will review these and other key issues:
- What are the LP investor hot button issues in "no-fault divorce" and "for cause" termination rights for removal of GPs and GP standard of care, fiduciary duties, and indemnification provisions?
- What are the most recent trends concerning carried interest calculations and clawback mechanisms?
- How are PE fund sponsors reacting to increasing SEC and LP investor scrutiny over expense allocation practices?
- What are the current developments in co-investment terms, and how have those terms evolved?
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