Private Equity, Venture Capital, and Real Estate Funds
We represent clients in the structuring and formation of private equity, real estate and venture capital investment funds and similar entities. Our experience in this area ranges from advising global financial institutions and established fund managers organizing multi-billion dollar funds with diverse international investor bases, to representing small groups of entrepreneurs with respect to the launch of their first funds, and everything in between. We also assist clients with the formation and launch of a wide array of specialty funds, and publicly listed registered business development companies.
Our attorneys have decades of experience with complex fund formation matters, and are adept at optimizing competing regulatory, tax, and commercial issues. Fund products include cross-jurisdictional parallel and master-feeder products, and related alternative investment vehicles and customized structures designed to minimize tax leakage and regulatory burdens while maximizing commercial objectives in and across jurisdictions.
In connection with venture funds and private equity funds, our investment management lawyers work closely and efficiently with our tax lawyers, mergers and acquisitions lawyers, emerging growth lawyers, and other specialized lawyers within the firm as applicable, taking advantage of the broad range of legal expertise available within Arnold & Porter. Likewise, for real estate funds, we draw on the strengths of our full-service, deeply experienced real estate deal team, which is fully integrated with our real estate fund formation practitioners and includes partnership, REIT and other specialized tax lawyers, transactional real estate lawyers, debt counsel, environmental lawyers and others.
In addition to our detailed fund formation experience and market knowledge, the firm's multi-disciplinary team regularly advises clients with respect to the creation and structuring of the management companies that manage or advise private equity and venture capital funds, or participate in the economics of such funds, and associated employment arrangements. Carry structures and related co-investment programs and vehicles routinely draw upon our international tax and regulatory expertise as we seek to address tax and commercial considerations affecting individuals based in or operating from different jurisdictions around the world.
In conjunction with our fund formation practice, we also routinely represent institutional investors in connection with their investments in private funds. The combination of our formation work and our work for fund investors means that we are able to stay current on significant issues and trends in the private funds marketplace, and are well-positioned to develop solutions to meet the particular needs of our clients.
We are experienced in, and well-qualified to assist with, the entire life-cycle of a private investment fund, including:
- Evaluating optimal structures for various types of investors, including taxable and tax-exempt investors from North America, Europe and Asian-Pacific countries, and balancing applicable investment management, securities, tax and other regulatory regimes, with business considerations and fund objectives.
- Comparing different legal and tax structures as applicable, such as limited partnerships, LLCs and private Real Estate Investment Trusts (REITs), or combinations of the foregoing, possibly with parallel investment vehicles to accommodate particular tax, securities or ERISA concerns.
- Assisting in setting business terms that are "market" (or evaluating the reasonableness of terms from an investor's point of view), whether this involves a fund sponsor doing an initial "friends and family" raise for a particular project, a new manager seeking to lock in a dedicated source of equity by forming a first fund, or an experienced fund sponsor that has more investor interest than it can accommodate.
- Structuring taxes efficiently from a sponsor's perspective, including evaluating the risks of legislative changes.
- Helping clients produce legally compliant marketing documents or similar presentations that take into account applicable securities laws, regulations and regulatory guidance.
- Negotiating terms of governing documents and side letters with potential investors.
- Managing the subscription and side letter processes, in coordination with the fund’s administrator.
- Assistance with ongoing regulatory compliance matters.
- Developing processes and procedures to implement joint venture co-investments between the fund and selected investors or third parties.
- Assisting sponsors in evaluating and documenting secondary transfers of limited partner’s interests.
- Helping clients to wind down and dissolve funds when the time comes to do so.
- Assisting with the formation of successor funds.
Matters on which we have advised clients include:
- formation of broad range of private equity funds, including buyout, distressed, growth equity and private equity fund of funds
- formation of real estate funds, including opportunistic, value add and core funds, and real estate fund of funds
- formation of distressed debt funds
- formation of impact investment funds
- the formation of private funds organized to invest in oil and gas assets
- the formation of co-investment vehicles
- the application of restrictions on bank sponsorship of, and investments in, private investment funds under the Volcker Rule
- the application of various exemptions from registration under the Investment Advisers Act and Commodity Exchange Act and exclusions from regulation under the Commodity Exchange Act
- private equity secondary transactions, including buy side, sell side, and sponsor side
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