A THOROUGH UNDERSTANDING OF PRIVATE EQUITY

RETOUR SOMMAIRE

A CACEIS PRODUCT DEVELOPMENT PUBLICATION - 2010

MAIN ACTORS AND STRUCTURES

Legal adviser

2.1.8

Regulatory pressure has increased the need for frequent legal advice. A private equity project often requires external legal support for the entire structure and in many cases each party involved (fund, manager and banks acting as a syndicate) will ap- point their own lawyer in order to ensure that the investment is effectively protected from a legal point of view. Usually legal advisers are asked to draft the following agreements or documents: • Structuring and financing: Assistance regarding the structure of the private equity fund, the domicile, ensuring the relation with the local regulatory authorities, advice on finan- cial, regulatory and fiscal compliance requirements, write out the constitutional docu- ments necessary for the establishment and offering of the private equity structure; • Shareholders’ or subscription agreement (details the terms of the investment, including the obligations of the GP, the indemnities given to the existing shareholders, penalty claus- es and shareholders’ rights); • Loan stock or debenture agreement: The contract establishes the terms under which dif- ferent forms of financing are provided; • Service agreements: Formalise the conditions of employment of key members of GP or external service providers (administrator, depositary, etc.); • Investments: Includes legal opinions on investment process, acquisition and divestment process, related financing. Many law firms specialised in private equity provide a complete set of services to private equity firms through any phase of the private equity investment lifecycle: • Investment period strategy: Investment advice concerning the legal, financial, tax struc- turing, valuation of investee companies and market due diligences issues; • Exit Strategy: Advice regarding the regulatory, tax and accounting issues related to the repatriation of funds to investors, valuation of investee companies, vendor due diligence or advice on mergers and acquisitions. Private equity firms have also a constant need in tax advisory. As private equity has be- come an industry and local business angels have been largely replaced by international investment companies, tax advisers help GPs to set up suitable investment schemes in a worldwide framework. These tax experts structure companies in different jurisdictions, select and fine tune financ- ing contracts adapted to these countries, negotiate tax rules with the authorities and review the structures agreements with third parties. Tax adviser

2.1

2.1.9

As more deeply described in chapter 3.1 (Fiscal aspects), tax advisers mainly work in 3 areas:

• Improvement of structure for LPs; • Improvement of structure for GPs; • Cash repatriation.

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