Private Fund Side Letters: Negotiating and Drafting Key Terms, Financing and Other Concerns
Recording of a 90-minute premium CLE webinar with Q&A
This CLE webinar will discuss the documentation of side letters between private fund managers and investment partners who need or demand terms which may vary from the underlying partnership agreement. The panel will examine most favored nation clauses, transfer rights, excusal rights, special reporting provisions, and other terms common to these arrangements. The panel will also discuss the potential administrative and legal ramifications associated with side letters which fund sponsors must consider before entering into side letters.
Outline
- Introduction to side letters and circumstances under which they arise
- Common terms
- Most favored nation
- Transfers
- Excusal rights
- Enhanced reporting
- Other
- Factors to consider in a negotiation
- Co-investments
- Credit facilities
- Regulatory concerns
- Impact on fund management: need for consistency
Benefits
The panel will review these and other critical issues:
- When are side letters typically requested in a fund-raise, and why are they often preferable to an amendment of the partnership agreement?
- How do MFN rights impact the ability of the fund manager to negotiate side letters?
- What are the most common points of contention concerning transfer rights? Excusal rights? Increased reporting obligations?
- Why is an understanding of any existing or future fund financing arrangements necessary when entering into side letters?
Faculty
Joseph M. Mannon
Shareholder
Vedder Price
Mr. Mannon is Chair of Vedder Price's Private Fund Formation group and a member of the firm's Investment... | Read More
Mr. Mannon is Chair of Vedder Price's Private Fund Formation group and a member of the firm's Investment Services group. He focuses his practice on legal and compliance matters for investment advisers, mutual funds, closed-end funds and unregistered vehicles such as hedge funds, hedge fund of funds and other investment entities. With regard to unregistered vehicles, he frequently counsels clients on fund formation and structuring matters for funds organized both in the United States and abroad. He also counsels clients on issues relating to commodity trading advisers and commodity pool operators. Mr. Mannon has substantial experience in regulatory and compliance matters affecting investment advisers, including registration and marketing, such as compliance with Global Investment Performance Standards (GIPS), as well as in drafting compliance policies and procedures. He counsels advisers on trading agreements, including brokerage and derivatives agreements. He also conducts mock Securities and Exchange Commission (SEC) examinations and represents clients before the SEC and other regulators in examinations and investigations. He also spends significant time counseling registered and unregistered investment company boards.
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Matthew (Matt) Posthuma
Partner
Ropes & Gray
Mr. Posthuma is a partner in Ropes & Gray’s private investment funds group in Chicago who focuses on the... | Read More
Mr. Posthuma is a partner in Ropes & Gray’s private investment funds group in Chicago who focuses on the formation of private investment funds and other transactions involving real estate companies, asset managers and financial institutions worldwide.
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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... | Read More
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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