The implementation of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) has been followed closely by our Private Equity group. The challenges presented by Dodd-Frank affect a range of private equity activity both from the fund formation and investor perspectives, and we are focused on counseling our clients in the new regulatory environment.
Calfee lawyers have represented sponsors and investors in a wide variety of closed-end and open-end funds, ranging in size from less than $10 million to more than $425 million in committed capital, including buyout, venture capital, mezzanine, special-purpose, and hedge funds, as well as funds-of-funds. We also counsel clients in fund restructurings, including spin-offs of pooled investment vehicles to independent ownership.
Representing sponsors and investors provides us with an in-depth understanding of private equity from a variety of perspectives. In addition, because we frequently continue to represent funds after they have been formed, we are sensitive to the problems that can arise over the life of funds.
Using a team approach, our corporate lawyers work closely with our tax, ERISA and securities lawyers, among others, to structure funds in the most efficient manner from a tax and operational point of view.
Structuring the Deal
Calfee also has extensive experience in structuring the sponsor’s internal management “deal.” This experience allows us to tailor the fund’s internal management to the sponsor’s objectives and to deal in advance with estate planning, control, distribution, separation, co-investing and other issues that may arise over the life of a fund management company.
In addition, we have devoted substantial resources to creating complex, “carried interest” sharing arrangements among the principals and investment professionals of a fund.
Representing Lead Investors
Calfee also represents lead investors in private equity funds, including corporate pension plans, institutional investors and state retirement systems. As a result of these representations, we are poised to address the economic and regulatory issues of a wide range of investors.
Our fund formation work, coupled with our investor representations, allow us to review and analyze a significant number of funds from every perspective, allowing us to provide well-rounded, multi-dimensional advice to our clients.
Making and Exiting Portfolio Investments
Calfee has been involved in the leveraged buyout industry for the better part of a century and has been at the forefront of its dramatic expansion. We have formed leveraged buyout funds and closed hundreds of leveraged acquisitions and divestitures. In the process, we have developed tax and corporate transaction structures and techniques and have obtained an extensive understanding of the market terms and conditions.
Calfee takes a business-oriented approach to leveraged buyouts. Our lawyers must understand the business being acquired and must focus on the client’s economic and operational objectives. Our involvement typically begins at the early stage, advising on critical legal issues and assisting in structuring the proposal in the most efficient manner from a business, tax and risk-allocation perspective (often in a very competitive auction environment). We also focus on our private equity clients’ needs to provide competitive and cost-effective management equity and incentive programs to their portfolio companies, consistent with their accounting objectives.
Our clients also turn to us for our strength in structuring and negotiating the various layers of senior and subordinated debt and equity financing in connection with a leveraged buyout. Typically, when we represent the deal sponsor, we also represent the target or portfolio company in structuring and negotiating the required financing. In transactions where we do not represent the deal sponsor, we frequently represent senior lenders, mezzanine lenders or providers of equity capital and are familiar with the structures and deal terms used to protect their interests.
Venture capital is another vital area in which Calfee is seasoned and able to add value for clients. We provide a full range of legal services to the VC community and understand the process for negotiating and structuring venture investments. We believe that a close understanding of the economics and business realities of each deal is critical to efficient deal management and effective representation. The balance between obtaining appropriate terms and cultivating quality, long-term relationships with a fund’s portfolio companies is key.
Our intellectual property practice of more than 35 attorneys along with our information technology and health and long-term care practices provide insight into the industries in which venture capital funds typically invest. We understand the potential benefits and risks associated with investing in these areas.
After assisting a venture capital client with its investments, we continue to add value by supporting and advising the fund in its ongoing relationships with its portfolio companies – facilitating the development of exit strategies, negotiating and structuring follow-on investments, and advising on board representation matters.