PRIVATE EQUITY PRACTICE
PRIVATE EQUITY PRACTICE
We can help you get deals done
the right way, anywhere in the world.
While the private equity business is vast CREATIVE SOLUTIONS TO COMPLEX PROBLEMS DEFINITIVE ADVICE, PRACTICAL GUIDANCE
and complex, the imperatives can be Private equity investors rely on us to provide Structural nuances can make the difference in
stated succinctly: creative solutions to the most complex the success or failure of a private equity
issues in evaluating, structuring, negotiating, deal. Clients rely on our ability to propose and
• funds structured for market terms and
and closing private equity investments. We critique structures based on broad strategic
know how to speed investments, evaluate and narrow technical issues involving
• investments that maximize portfolio value risk, get the best terms when buying or sell- corporate finance and securities, corporate
• transactions that enhance portfolio ing, and apply leverage during negotiations. governance, government regulation, tax,
companies On behalf of both general partners/sponsors pensions, labor and employment, corporate
and limited partner investors, Dechert insolvency, intellectual property, and litigation.
• exits accomplished at the right time and
lawyers have advised on the formation of
delivering the right return
hundreds of private equity funds of every Dechert has a strong track record as advis-
Dechert lawyers know the private equity kind and evaluated the key issues with a ers to private equity sponsors and investors.
business intimately and advise clients at 360° perspective. Our goal is to help you get the deal or terms
every phase of the investment life cycle. We you expect, find and leverage the most attrac-
work with sponsors in forming funds, invest- That’s why Dechert was recently recognized tive investments available, and, through a
ing in portfolio companies, structuring as one of the “most active law firms” for successful exit, realize the maximum return
financings and add-on transactions on behalf both fund formation and fund investments by on your invested capital.
of portfolio companies, and accomplishing Private Equity Analyst; recommended for
successful exits, including fast-tracking an private equity by Chambers, JUVE, and The
IPO, when appropriate. We work closely Legal 500; and ranked among the top
with institutional investors as well. We can firms for buyouts in The American Lawyer
help you get deals done the right way, Corporate Scorecard and mergermarket.
anywhere in the world.
FUND FORMATION: FUNDS STRUCTURED FOR
MARKET TERMS AND TAX EFFICIENCY
We know how to speed investments, evaluate risk, get the best terms
when buying or selling, and apply leverage during negotiations.
FUND SPONSOR REPRESENTATIONS A major money-center bank retained us to form a private equity fund that would access
Dechert lawyers advise sponsors and princi- approximately 50% of its capital commitments from the bank itself and 50% from
pals of private investment and private equity third-party investors. This was the first time that the bank was opening a fund to signifi-
funds in fund formation and capital raising. cant outside investors. Dechert assisted the bank in structuring a fund with market
terms attractive to third-party limited partners. The fund also had a general partner and
We structure many types of funds around
management company structure that permitted the bank’s employees to invest as
the world, including:
individual members of an independent general partner, yet remain employees of a bank
subsidiary serving as the management company for the fund. The structure successfully
• leveraged buyout funds
balanced the interests of the bank, its employees, and third-party limited partners.
• venture capital funds
• funds of funds
• collateralized debt and
loan obligation funds
• real estate funds
• secondary funds
• distressed debt funds
• hedge funds
In addition, we have substantial resources
focused on alternative investment funds,
including long/short equity funds, fixed-
income hedge funds, relative value funds,
statistical arbitrage funds, global macro
funds, large cap funds, index funds, and
Clients with diverse investing philosophies call
on us to help them evaluate the merits of
fund structures such as limited partnerships,
limited liability companies, corporations,
private and publicly traded offshore vehicles,
Small Business Investment Companies
(SBICs), and Business Development
GOOD GOVERNANCE is essential, and our significant experience with hedge funds REVIEWING INVESTMENTS, NEGOTIATING
lawyers have the experience necessary to domiciled in the Bahamas, Bermuda, the TERMS Dechert’s experience comes from
structure funds for full compliance. Cayman Islands, the Channel Islands, and reviewing proposed private equity invest-
many European jurisdictions. ments and negotiating investment terms for
Our team includes former U.S. and European foundations, endowment funds, pension
regulators—former senior officials and staff ADVICE FOR INSTITUTIONAL INVESTORS trusts, and funds of funds. Our institutional
members of the U.S. Securities and Exchange While institutional investors have many of the clients include large private retirement trusts
Commission (SEC), regulators from the same goals as other investors, we know of several Fortune 500 companies and
Commodity Futures Trading Commission they can have constraints that affect how they charitable foundations with several billion
(CFTC) and NASD, and lawyers with exten- seek higher returns. dollars in assets.
sive UK and EU regulatory experience and
close ties with the Financial Services Many lawyers on our private equity team MITIGATING SOURCES OF TENSION This
Authority (FSA). focus on issues relevant to institutional experience gives us an understanding of
investors. We have extensive experience in possible sources of tension with sponsors
TAX EFFICIENCY Dechert’s tax lawyers are designing and advising private funds to related to fiduciary obligations, disclosures,
immersed in domestic and offshore private operate using investment strategies that are governance, and relationships with other
equity fund formation and vehicles, appropriate for pension fund investors and investors, and how to mitigate them.
and advise clients on the benefits of each in structuring fund investments and portfolio
jurisdiction and each structure. We have transactions that meet the more stringent
reporting standards of institutional investors.
INVESTMENTS AND TRANSACTIONS
THAT MAXIMIZE PORTFOLIO VALUE
We help funds enter the auction or club arrangement as a highly confident
party, ready to move forward with a successful bid.
Dechert’s private equity lawyers evaluate We were asked by a client to handle the acquisition of a South Korean semiconductor
and execute investments across a wide business from its creditors on behalf of all of the sponsors in a club deal. The parent
spectrum of industries, from financial services company had been near bankruptcy because of the state of its industry sector, and when
and technology to consumer products and business improved, the creditors decided to sell this business. Our team navigated tax,
manufacturing—and most places in regulatory, real estate, and corporate law issues in the United States, Korea, Japan,
between. Taiwan, Hong Kong, the United Kingdom, Luxembourg, and the Netherlands to complete
the deal. We developed a multitier U.S. and European holding company structure aimed
Broad transactional experience and industry at minimizing so-called U.S. “subpart F” problems that often plague acquisitions of
knowledge enhance our value to clients foreign operations by U.S. funds. After the completion of the acquisition, we guided the
during every stage of the investment cycle. portfolio company through numerous financing and collateral security issues in the United
States and several Asian and European countries in connection with a senior credit facility
ACQUIRING PORTFOLIO COMPANIES The and the issuance of three tranches of Rule 144A high-yield notes.
increasing use of auctions for portfolio pur-
chases and club deals—replacing proprietary
arrangements that are simpler to control—
Following an initial approach from a competitor and a strategic review, the shareholders in
means more work and expense for financial
the world’s largest non-bank foreign exchange specialist, which included a major UK
buyers. Dechert lawyers are intimately
private equity fund, decided to sell a majority interest in the company. Following considerable
familiar with changing auction dynamics
interest from private equity sponsors, a majority stake in the group was sold in a leveraged
and can help position you for success.
buyout to a major international private equity sponsor for an enterprise value of over
£1 billion. A multijurisdictional team of Dechert lawyers in London, New York, Washington,
We help funds enter the auction or club
Brussels, Paris, and Munich advised the client and its shareholders on all aspects of the
arrangement as a highly confident party,
deal. The transaction required Dechert’s in-depth knowledge of the LBO market and our
ready to move forward with a successful bid.
ability to work in a regulated industry in over 30 countries on six continents. We also
This means developing a unique angle to
advised the company on a global internal corporate reorganization and refinancing, which
give you an advantage in the bid process,
had to be completed before the closing.
getting the due diligence done quickly, and
helping to structure the financing to position
you as a serious buyer.
GROWING PORTFOLIO VALUE Frequently, our When a fund sponsor retained us to represent the fund in its carve-out of the semi-
private equity fund clients retain us to repre- conductor business from a public company, we handled the acquisition, management
sent their portfolio companies—from start-ups equity offering, bank financing, and a high-yield bond offering. One unusual aspect
to public companies. We work with them was resetting the bond offering in 48 hours to add warrants to purchase the stock of
to ensure that the company grows in value the portfolio company—an unanticipated change necessary to sell the bonds in a
and is prepared for an eventual sale or public collapsing high-yield debt market. Within six months, we handled the portfolio company’s
offering. These preparations may include IPO, the largest in the semiconductor industry to that time. Since the IPO, the company
add-on acquisitions, dispositions, and strate- has virtually turned over its product portfolio, shareholdings, and management,
gic joint ventures. and Dechert has worked with it every step of the way, using our skills in European and
U.S. M&A, international IP licensing and patents, tax, securities, and financing.
WORKING WITH TROUBLED OR DISTRESSED We represented the private equity arm of a major bank in the acquisition of a name-
INVESTMENTS When clients have a stake in brand consumer technology company out of bankruptcy. Several groups were vying for
troubled or distressed businesses, we advise the company, including its unsecured creditors, but our client prevailed in an auction
them on restructuring and refinancing alter- and secured a 65% stake. The acquisition involved 48 subsidiaries in 30 countries.
natives. Our experience in this area ranges This transaction was handled by our lawyers in the United States, the United Kingdom,
from negotiated workouts with lenders to U.S. and Continental Europe. We subsequently handled the multimillion-dollar sale of the
Chapter 11 proceedings, and often means company to an international conglomerate.
assisting clients in getting their equity with-
out running afoul of the Bankruptcy Code and
creditors’ rights. Issues that arise for private
equity funds with distressed investments may
include board governance and decisions
made in the “zone of insolvency,” the rights
of secured and other investors, and con-
sideration of bankruptcy and other strategic
SUCCESSFUL EXITS THAT
DELIVER THE RIGHT RETURNS
Confident in our broad and deep resources, Dechert’s private equity
clients can concentrate on their passion: finding investment opportunities
and maximizing their returns.
While IPOs and strategic sales may be top- When we handled the leveraged buyout of a consumer goods company on behalf of a
of-mind approaches to maximizing returns, private equity client, we began a relationship that has involved us in all of the company’s
market conditions and industry trends mission-critical decisions. Assisting in developing the strategy to grow the company through
may call for a different approach to liquidity. acquisitions until it became an industry leader—and thus an attractive IPO candidate—
Dechert advisers illuminate the strategies we represented the company in its purchases of several leading brands. Our corporate
open to each client so they can develop a and tax lawyers helped management identify and plan the optimal exit strategy—an initial
creative approach to exit in any climate. public offering of enhanced income securities (EIS), a complex investment unit composed
of debt and equity securities that works for lower-growth, high-cash-flow businesses. The
approach we developed, which required intricate tax planning, has become a model for
IPOs of its kind.
When our client, a global private equity firm, was ready to sell an international manufacturing
company headquartered in Germany, a number of bidders competed in the auction. The
private equity fund bidders were bested by a ¤1.2 billion offer from a global conglomerate
that was expanding in the sector. Due to the nature of the auction, the seller (our client)
had to negotiate and sign a purchase agreement within four days. Dechert had represented
the private equity fund seller when it had first acquired the portfolio company from a
Germany-based multinational corporation, then in a recapitalization funded by the issue
of senior notes and a mezzanine loan—which more than returned the private equity firm’s
original investment—as well as in this successful exit.
Confident in our broad and deep resources, Dechert’s private equity clients can concentrate
on their passion: finding investment opportunities and maximizing their returns.
DECHERT HAS A TOP-RANKED
PRIVATE EQUITY PRACTICE
WE ARE TOP RANKED FOR:
Volume of North American buyouts Number of private equity buyouts Number of funds formed and closed
mergermarket The American Lawyer Corporate Scorecard Private Equity Analyst
Value of European exits Number of deals closed Dechert is ranked among the top M&A law
mergermarket Private Equity Analyst firms in the league tables of Thomson
Financial, Corporate Control Alert,
Bloomberg, Mergerstat, The American
Lawyer, mergermarket, and Le Magazine