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Course Details

Course Information
  • smart_display Format

    On-Demand

  • signal_cellular_alt Difficulty Level

    Intermediate

  • work Practice Area

    Banking and Finance

Date & Time
  • event Date

    Tuesday, June 25, 2024

  • 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 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

Witek Jurewicz
Partner
Dla Piper LLP US

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).

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Adam S. Tope
Partner
Dla Piper LLP US

Mr. Tope provides investment fund sponsors, investors and principals with creative, commercial and realistic advice relating to fund formation and secondaries transactions. He brings a global perspective to his clients, having represented managers and investors in dozens of jurisdictions. Mr. Tope's sponsor-side clients regularly include prominent secondaries firms, private equity and hedge fund managers, real estate managers, middle market managers and startup managers/spinouts. He advises these clients with entity formation, introductions to service providers, discussions with placement agents, drafting of offering memorandums, negotiations with investors and Investment Advisers Act and Investment Company Act compliance, as well as guidance on ongoing operational funds. Mr. Tope has extensive experience with secondaries transactions including GP-led restructurings, tender offers, stapled secondaries and sales and purchases of significant pools of fund interests. Adam also draws on his experience as a former computer programmer to advise fund managers forming cryptofunds.

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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

  1. Secondary market for private equity investments: seller and buyer incentives
  2. Letters of intent: key issues and considerations
  3. Fund documentation due diligence
    1. Subscription agreement
    2. Fund governing documents and investor elections
    3. Side letter (if any)
  4. Purchase and sale agreement
    1. Purchase price adjustments
    2. Excluded obligations
    3. Material adverse change/delayed payments
    4. Transfer costs
    5. Representations and warranties
    6. Indemnification
  5. Fund transfer agreements
    1. Key considerations
    2. Indemnification
  6. 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?