Private Equity and Investment Funds

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Day Pitney coordinates the efforts of its practice groups to individualize a service package for each client to provide advice on pre-formation strategy, organizational structure, regulatory compliance, compensation arrangements, and document preparation for investment funds of all kinds, including hedge funds, private equity funds, real estate investment funds, venture capital funds, leveraged buyout funds, and mutual funds. The firm's investment management clients include investment advisory firms, broker-dealers, real estate investment professionals, leveraged buyout groups, banking organizations, and other financial institutions.

Day Pitney's attorneys have significant experience spanning decades in transactions involving a wide variety of private equity funds. The firm's attorneys have represented persons forming venture capital funds, leveraged buyout (LBO) funds and many different kinds of hedge funds. The firm's attorneys have also represented funds themselves in connection with their strategic investment transactions and have represented a diverse group of both institutional and individual investors in connection with their investment in such funds.

Day Pitney's experience with domestic and international private investment funds includes providing tax advice in connection with the creation of new funds, the structure of investment entities, acquisitions, restructuring of existing funds, investment activities, and exit strategies. The attorneys in the Private Equity and Investment Funds practice group also work closely and coordinate with attorneys in other disciplines, including the firm's Emerging Companies and Venture Finance group, the Mergers, Acquisition and Joint Ventures group, the Private Companies group and the Public Companies group.

Attorneys in this practice group provide services including:

  • Fund formation, as limited partnerships or limited liability companies
  • Fund documentation, including term sheet, offering memoranda and subscription agreements
  • Manager/advisor formation and management services agreements
  • Registration of investment advisors
  • Securities law advice, including advice regarding the FINRA's free-riding and withholding rules relating to new issues
  • Tax advice, including structuring international investment and manager-carried interests
  • ERISA advice, including advice related to avoiding or minimizing UBTI
  • Compliance advice to investment managers on addressing federal and state compliance requirements through implementation of an effective compliance program that contains risk-based policies and procedures (including a records management program), processes for monitoring compliance risks and preventive controls, systems to quickly remediate identified compliance risks, and a periodic review of the compliance program
  • Compliance advice to institutional investors, including pension funds, to assist fiduciaries in protecting assets through focused investment manager due diligence in the selection process, ongoing review of investment managers' back-office compliance processes, and staff training on evaluating investment managers' compliance disclosures (especially those relating to potential conflicts of interest)
  • Enforcement by limited partners of general partner obligations
  • Assisting in implementation of fund investment strategy, including participation in documenting acquisition of portfolio securities
  • Advice in connection with participation in management issues in portfolio investments
  • Advice in connection with troubled investments

Formation and Operations

  • Represented sponsors in connection with the formation and launching of hedge funds with various proprietary trading strategies (including strategies in domestic and foreign exchanges) and various industry focuses, including domestic hedge funds and offshore funds (including master-feeder funds and side-by-side funds) domiciled in the British Virgin Islands, the Channel Islands, Luxembourg, and the Cayman Islands.
  • Represented sponsors in connection with the formation and launching of private equity funds and venture capital funds engaging in various types of acquisitions, including leveraged buyouts of middle-market companies in the technology, software, and retail industries, and various types of early-stage investments in technology and life sciences companies.
  • Represented sponsors in connection with the formation and launching of real estate private equity funds, including domestic real estate funds, domestic real estate funds of funds, offshore real estate funds located in the British Virgin Islands and the Channel Islands.
  • Represent family of investment funds, specializing in energy investments, including filings for the larger funds in the family under the 1933 and 1934 Acts; investments under management exceed $500 million.
  • Represent a closely held registered investment advisory firm with more than $4 billion under management regarding the Investment Advisers' Act, investment partnerships, general corporate and contractual matters.
  • Represented broker-dealers and banks in their acquisition and integration of investment advisory firms.

Investments in Portfolio Companies

  • Represented private equity funds in connection with their acquisitions of various equity interests, including common and preferred stock, in various stage portfolio companies involved in several industries, including technology, Internet, retail consumer products, manufacturing, telecommunications, transportation, and health care.
  • Represented private equity funds in connection with their mezzanine debt financing investments in companies in various industries including telecommunications, manufacturing, service and consumer products.
  • Represented private equity firms in connection with their participation in management-led buyouts of portfolio companies.
  • Represented venture capital funds in structuring and documenting follow-on debt/equity investments in existing portfolio companies that cram down nonparticipating equity holders.

Institutional Investor Representation

  • Represented a wide spectrum of investors with respect to their direct and secondary investments in private equity, venture capital, real estate and hedge funds, including large public pension funds, a major educational institution, several insurance companies, fund of funds managers, and a number of private pension funds.
  • Represented an insurance company in connection with an aggregate investment in excess of $100 million in more than 20 hedge funds.
  • Represented a public pension fund in its $100 million investment in a hedge fund of funds.
  • Represented a public pension fund in its $150 million investment in a separate account with a hedge fund of funds manager and negotiation of a related strategic services agreement.
  • Represented a registered investment advisor in connection with management and investment of a $300 million private equity fund of funds.
  • Represented an insurance company in connection with investments (between $10 million - $30 million) in real estate funds.
  • Represented a public pension fund in connection with the winding up and liquidation of a private equity fund in which it held a limited partnership interest and the sale of securities (equity and debt) acquired through such winding up.
  • Represented a public pension fund in its investment of $75 million in a private equity fund focused on traditional leveraged acquisitions, management buyouts and growth capital in companies with operations in North America and Western Europe.

Representation of Individuals, Principals and Investors

  • Represented investment fund management partners and employees in connection with their employment arrangements and equity participation arrangements.
  • Represented investment fund management partners in connection with separation packages, buyout of equity participation, buy-sell agreements, and in planning for their individual liquidity and retirement.
  • Represented individuals and family offices in connection with their investments in, and redemptions from, private equity funds.
  • Represented numerous fund managers in connection with estate planning issues including transfer of interests in funds and management companies to trusts for children.
  • Represented investment fund managers in connection with a deferral of management fees.
  • Represented investment fund managers in connection with protection of assets, including creation of offshore trusts and structures.
  • Representation of principals regarding matters of risk management and liability exposure, particularly in connection with fiduciary roles in portfolio companies.

Representation of Mutual Funds

Many mutual funds, investment advisors and commodity trading advisors rely on our attorneys to assist them in complying with the laws applicable to their activities. Some of the issues on which mutual funds and investment advisors have sought our counsel include:

  • Organization of mutual fund and registration with the Securities and Exchange Commission
  • Representation of independent directors and trustees
  • Foreign custody arrangements
  • 12b-1 distribution plans
  • Soft dollar arrangements, performance fees, and investment advisors' payment for client solicitations
  • Mutual fund use of affiliated brokers
  • Potential obligations to register a mutual fund as a commodity pool operator and its advisor as a commodity trading advisor when the fund will deal in financial futures hedging activities
  • Bank sponsorship and distribution of mutual funds
  • Permissibility of directed brokerage
  • Requirements regarding advertising by mutual funds and by investment advisors
  • Procedures for compliance with the brochure rule