Structuring the Purchase and Sale of Partnership/LLC Interests in Private Equity Funds

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.