Structuring the Purchase and Sale of Partnership/LLC Interests in Private Equity Funds
LOIs, Due Diligence, Drafting the PSA, Negotiating Transfer Agreements, and Determining the Tax Ramifications of a Transfer

Course Details
- smart_display Format
On-Demand
- signal_cellular_alt Difficulty Level
Intermediate
- work Practice Area
Banking and Finance
- event Date
Tuesday, June 25, 2024
- schedule Time
1:00 p.m. ET./10:00 a.m. PT
- timer Program Length
90 minutes
-
This 90-minute webinar is eligible in most states for 1.5 CLE credits.
This CLE course will guide counsel on how to structure and document the secondary purchase and sale of a partnership or LLC interest in an investment fund. The panel will discuss letters of intent, due diligence of fund interests, legal issues in a purchase and sale agreement, legal issues in fund transfer agreements, and related tax issues.
Faculty

Mr. Jurewicz concentrates his practice on domestic and international taxation. He provides a full complement of tax services for U.S. and non-U.S. investors, advising on primary investments and secondary market transactions. Mr. Jurewicz has structured investments for U.S. and non-U.S. investors, with a focus on private equity, debt, real estate, operating businesses and alternative investments. He also advises fund sponsors on fund formation, structuring and mergers and acquisitions. Mr. Jurewicz has experience with tax-efficient structures for non-U.S. operations and investments, tax treaty planning and U.S. international tax reporting and compliance. He also advises investors and financial institutions and their clients on international tax enforcement initiatives, including the Foreign Account Tax Compliance Act (FATCA).

Mr. Tope advises secondaries firms, investment fund sponsors, and investors on fund formation and secondaries transactions. Having completed more than 250 secondaries transactions in his career, he has significant experience with pooled sale/purchase transactions and GP-led restructurings. Mr. Tope’s secondaries clients include lead investors in connection with GP-led and other complex secondary transactions and buyers and sellers in connection with the purchase and sale of fund interests. His sponsor-side clients include prominent and emerging private equity, infrastructure, energy transition, real estate, venture capital and hedge fund sponsors. Mr. Tope advises in multiple areas, including the drafting of offering memoranda, negotiations with investors and Investment Advisers Act and Investment Company Act compliance. He brings a global perspective to his practice, having represented managers and investors in dozens of jurisdictions. Mr. Tope has worked with spin outs from Apollo, Carlyle, Riverstone, Summit Partners, and others. He has a deep understanding of how principal compensation is structured and can guide principals in negotiating vesting arrangements, key person/for cause removal rights, and rights to carried interest/promote. He is experienced representing managers in connection with negotiations with anchor and lead investors and GP-stakes transactions. Mr. Tope’s investor-side clients include allocators, family offices, funds of funds, endowments, sovereign wealth funds and royal families. He represents these investors in dozens of transactions in nearly every jurisdiction on an annual basis.
Description
The private equity secondary marketplace has grown significantly in the past few years. Secondary transactions offer potential liquidity to holders of fund interests and provide an investment opportunity for secondary funds and large institutional buyers.
There is no consistency in the industry around the mechanics of a secondary transaction. Even different funds sponsored by the same manager may have different mechanics. Thus, it is imperative that both buyers and sellers perform due diligence on the underlying fund documentation.
The subscription agreement should be reviewed primarily to determine what representations the buyer will need to make to the fund and restrictions on the interests being purchased. The fund governing agreement must also be reviewed to determine the fund's unique process to sell or buy an interest in the fund from an existing investor with a focus on the transfer section of the document. This section will provide the process required to transfer the fund interest from seller to buyer.
Listen as our authoritative panel discusses the complicated secondary process and the lifecycle of a purchase and sale transaction. This program will include an overview of letters of intent; tips on areas of diligence when reviewing underlying fund documents; negotiation and key terms of purchase and sale agreements between buyers and sellers; negotiation of and key issues in transfer agreements between buyer, seller, and fund sponsor; and the tax considerations for all parts of the foregoing lifecycle.
Outline
- Secondary market for private equity investments: seller and buyer incentives
- Letters of intent: key issues and considerations
- Fund documentation due diligence
- Subscription agreement
- Fund governing documents and investor elections
- Side letter (if any)
- Purchase and sale agreement
- Purchase price adjustments
- Excluded obligations
- Material adverse change/delayed payments
- Transfer costs
- Representations and warranties
- Indemnification
- Fund transfer agreements
- Key considerations
- Indemnification
- Tax issues of the foregoing
Benefits
The panel will review these and other critical issues:
- What is typically included in a letter of intent between buyer and seller?
- Which provisions in the fund partnership agreement should be of particular concern to a secondary purchaser?
- How should seller's and purchaser's counsel address the tax ramifications of the transfer of a fund interest?
- Can the purchaser change the tax elections initially made by the seller?
- What are the issues to address in the purchase and sale agreement?
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