Our Investment Funds team advises fund sponsors, investors and other market participants throughout the life cycle of private investment funds, from formation to marketing to the investment period to the liquidation or restructuring of the fund. Our funds attorneys have a 360 degree view of the issues facing fund managers and investors, enabling them to anticipate the needs of clients. The team covers a multitude of strategies – hedge, real estate, debt, venture capital, private equity, secondaries, funds-of-funds, commodities and alternatives, among others. Our Investment Funds team is also experienced with a number of specialized funds, including SBICs, EB-5 funds, qualified opportunity zone funds, cryptocurrency vehicles and REITs. We also regularly help fund managers with regulatory, tax and benefits matters relating to investment advisers, commodity pool operators, investment company exemptions, domestic and international tax structuring and ERISA, among other regulatory regimes. Our full-service platform covers the complete spectrum of issues that involve private fund sponsors and investors, including:
Fund Formation and Marketing: We represent investment funds and their managers on all aspects of fund formation, including navigating Securities Act and Investment Company Act exemptions, choice of entity, capital structure and tax considerations; drafting and negotiating fund documentation; structuring management fee and carried interest arrangements, waterfall distribution and clawback provisions; counseling on the sales process, including the development of marketing materials, guidance on permissible marketing practices and negotiation of placement agent agreements; and guiding clients through the closing process.
Limited Partner Representations: We represent large charitable organizations and endowments, family offices, funds-of-funds, other institutional investors and high-net worth individuals in their investments in a variety of asset classes. We have extensive experience negotiating governing documents and side letters, mitigating complex tax issues such as UBTI, ECI, and other US and foreign tax issues, and working through regulatory, governance, and ESG issues. We work with investors investing in private equity funds, hedge funds, real estate, investment programs, operating companies and commodity pools.
Structuring: In addition to structuring vehicles at formation, our team has the specialized expertise required when structuring transactions at the fund level, including with the formation of blockers, master/feeder structures, AIVs and co-invest vehicles; structuring of family offices and other institutional investment vehicles; tax structuring, including via offshore vehicles, and dealing with issues pertaining to unrelated taxable business income (UBTI), income effectively connected with a US trade or business (ECI), passive foreign investment companies (PFICs), opportunity zones, the Foreign Investment in Real Property Tax Act (FIRPTA), tax elections and season-and-sell strategies, among other things; and qualifying for and maintaining the venture capital operating company (VCOC) and real estate operating company (REOC) exemptions from the ERISA plan assets regulations.
Secondaries and Funds Transactions: We represent buyers, sellers and other liquidity providers in a wide variety of investment fund transactions, including GP-led restructurings, fund tender offers, stapled secondaries, co-investments, secondary direct private equity investments, alternative secondaries, joint ventures, portfolio syndications, basket transactions, preferred equity and subordinated debt arrangements, private company secondaries, and synthetic secondaries. In addition, our Investment Funds team is experienced at representing registered and unregistered investment advisers in the acquisition of other management firms, fund complex purchases and lift-outs.
Regulatory Compliance: We routinely advise fund managers on their regulatory compliance needs, both at the federal and state level. Our experience covers registration, exemption, examination and enforcement issues under the Investment Advisers Act, the Investment Company Act, broker-dealer laws and the Commodity Exchange Act. We also have substantial experience advising on ERISA fiduciary obligations respecting investments and other plan asset issues.
The Investment Funds team works closely with other practice groups throughout Polsinelli, including our nationally recognized real estate, health care and FinTech practices, to provide a full suite of services to numerous types of funds, including:
- Real Estate Funds & REITs: Our cross-disciplinary team includes real estate lawyers, securities lawyers and tax advisers who focus on all aspects of real estate structuring and lending, such as joint ventures, partnerships, mezzanine lending, preferred equity, TICs, real estate equity funds, qualified opportunity zone funds and REITs.
- Private Equity & Venture Capital: We actively advise funds on their investment activity in nearly all stages, including those with strategies including seed and early-stage venture capital, leveraged buyouts, growth capital, fund-of-funds and secondaries. Our transactional experience covers nearly all forms of investment, including preparation and negotiation of terms sheets and letters of intent, definitive agreements and other related documentation, including the full suite of equity and debt financings necessary to fund the transactions to completion. We also regularly advise investors in forming and executing roll-up strategies and exit planning.
- Fundless Sponsors: More frequently, we see managers and investors that prefer the flexibility of raising capital without being constrained by the investment mandates of a blind pool. We work with sponsors in assembling and marketing special purpose vehicles, joint ventures, strategic alliances, direct co-investments and funds-of-one, and work together as a group to both raise capital and execute the underlying transaction as part of one seamless deal team.
- Hedge Funds: Polsinelli’s Investment Funds team represents hedge fund sponsors who are focused on a range of investment and arbitrage strategies including private and distressed debt, long/short equity, credit and high-yield, fixed income, multi-strategy, emerging markets, global macro and derivative markets, and actively advise managers on issues relating to trading, material nonpublic information, reporting and compliance.
- SBICs: Our SBIC Regulatory & Finance practice is dedicated to helping SBICs and potential SBICs navigate the full range of legal issues critical to their success. Our team informs our SBIC clients’ business decision-making process from the point of formation and licensing, to providing regulatory advice, and leading their financing, investment, and related transactions.
- Private Debt Funds: Our Investment Funds team works in tandem with our Private Debt team to service fund managers with a broad array of debt strategies, including direct lending, mezzanine, distressed debt trading, special situations, subscription facility and other fund-level lending and borrowing and venture debt. This allows us to guide clients at every stage of the financing process.