Private Equity and Venture Capital

Schiff Hardin's private equity practice represents buyout and venture capital funds and funds of funds. We provide legal solutions to our clients in all phases of the investment cycle and at all levels of the capital structure, particularly equity and subordinated debt. Our representation includes:

  • Mergers and acquisitions transactions
  • Fund formation
  • Portfolio company representation
  • Public market transactions
  • Financings
  • Venture capital investments
  • Restructurings and workouts
  • "Fundless sponsors"
  • Representation of limited partners and other investors
  • Specialized sale-side engagements
  • Cross-border transactions

Working together with Schiff Hardin attorneys in Chicago, New York, Washington, Atlanta, San Francisco and Boston, we are able to provide our private equity clients comprehensive legal solutions in all areas that impact their businesses.

Like our clients, we take a team approach to our work, organizing ourselves into service teams dedicated to the specialized needs of our clients. In addition to cost efficiencies, this approach allows us to bring particular industry expertise to our engagements. Through sheer number of transactions and the breadth of practice of our firm in general, we offer particular depth of experience in such industries as consumer products, distribution, logistics, for-profit post-secondary education, energy (including utilities), food, infrastructure and construction, chemicals, pharmaceuticals, entertainment, real estate, hotels, and the service sector.

We appreciate that our private equity clients' reputations are perhaps their most valuable currency, and that our actions reflect upon these clients. Our deep and longstanding relationships in the private equity community reflect our demonstrated ability to respond quickly to any of our clients' needs and to vigorously represent our clients' interests while still preserving their valuable relationships with co-investors, lenders and management teams.

Mergers and Acquisitions Transactions

Schiff Hardin's attorneys have acted as lead counsel in hundreds of successfully completed investments, mergers, acquisitions, management buyouts, spin-offs, going private transactions, dispositions and financings with transactions ranging in size from several million to several billion dollars. Our experience includes all forms of transaction structures (e.g., stock, asset, merger, recapitalization), complex capitalizations, transactions involving multiple levels of debt and equity financing (including seller financing and public debt), reorganizations and management rollovers. We also represent management groups who are teaming with a private equity fund in a particular investment.

 

Fund Formation

Schiff Hardin attorneys have a long history of representing sponsors and other entrepreneurs forming private equity funds and other investment vehicles. Our attorneys have formed:
  • Traditional committed capital buyout funds
  • Funds of funds
  • Small business investment companies (SBICs)
  • So-called "one-off" or single investment funds

 

Schiff Hardin's depth of practice in tax, securities laws, the Employee Retirement Income Security Act (ERISA) and real estate in particular allows us to creatively address the many complexities of organizing these funds and other investment vehicles.

Portfolio Company Representation

Schiff Hardin typically serves as general counsel to the portfolio companies acquired by our private equity clients. When requested, we draw upon the skills and experience of our attorneys nationwide to serve these firm clients with their day-to-day legal needs in matters involving contracts, labor, tax, employee benefits, environmental, real estate, intellectual property and litigation. We also represent these portfolio companies in the major events of their business life cycle, including acquisitions, dispositions, joint ventures, financings, workouts and exit transactions.

 

Public Market Transactions and General Counsel Services

Schiff Hardin's depth of experience in public market transactions, securities reporting requirements and corporate governance allows us to navigate the nuances and complexities of taking portfolio companies public.

 

Schiff Hardin represents portfolio companies and their owners in their initial and follow-on public offerings. In many instances, we serve as general counsel to the former portfolio company after it has become a public company.

Financings

Schiff Hardin has substantial experience representing senior lenders and mezzanine investors. That experience, together with our highly regarded borrower-side financing work for private equity funds and their portfolio companies, allows us to provide our clients with sophisticated, timely and efficient counsel.

 

We represent institutional investors and mezzanine and "hybrid" funds ranging in size from $50 million to more than $1 billion of committed capital, and have advised these clients on hundreds of mezzanine financings ranging in size from $3 million to more than $100 million.

Venture Capital Investments

Schiff Hardin represents venture capital investors, including funds, in their investment activities. As lead counsel to consortiums of venture capital funds, Schiff Hardin attorneys structure the investments as well as the relationships among the various venture capital funds. With particular emphasis on the period beginning in 1998, our attorneys have counseled venture capital clients through the many ups and downs of that period, including the changing transaction structures and dynamics as well as the workouts and restructurings necessitated by those challenging times.

 

Restructurings and Workouts

When the need arises during the course of an investment life cycle, Schiff Hardin's private equity clients and portfolio companies work closely with our Restructuring, Bankruptcy and Creditors' Rights group. This group draws upon its experience representing debtors and secured as well as unsecured creditors, and litigating the matters that arise in such representations, to counsel our private equity clients in workout and bankruptcy situations.

 

"Fundless Sponsors"

While the term "fundless sponsor" is relatively new, for more than twenty years Schiff Hardin's attorneys have represented investors without committed capital in their middle market buyout and investment activities.

 

This representation spans sponsors who seek private equity funds or other institutional investors to complete a transaction, as well as sponsors who complete a transaction with their own funds. In addition, we represent buyout funds that team with fundless sponsors on transactions first identified by those sponsors.

Representation of Limited Partners and other Investors

Schiff Hardin regularly represents university and other endowment funds, pension plans, other institutional investors and family offices in their financial arrangements as limited partners in private equity, mezzanine and other similar funds. Potential investments in most top-tier fund offerings are reviewed by our attorneys on behalf of these clients. We review our clients' proposed investments with respect to corporate, tax, regulatory and employee benefit issues. As a result, we are current on the most recent developments in fund formations and structure. We identify possible issues with funds and advise our clients in crafting solutions to address their concerns.

 

Specialized Sale-Side Engagements

Through our many years in the investment field, Schiff Hardin has forged excellent relationships with many of the top financial advisors to the private equity community. We are often asked by these advisors to assist in the representation of companies where our depth and range of transactional experience is well-suited for the company considering a private or public exit.

 

Cross-Border Transactions

Schiff Hardin attorneys routinely represent clients in cross-border transactions. Whether on behalf of private equity clients or other firm clients, we engage in acquisitions, dispositions and joint ventures in Europe, Asia, Central and South America and Canada.

 


Mergers and Acquisitions Transactions

Schiff Hardin's attorneys have acted as lead counsel in hundreds of successfully completed investments, mergers, acquisitions, management buyouts, spin-offs, going private transactions, dispositions and financings with transactions ranging in size from several million to several billion dollars. Our experience includes all forms of transaction structures (e.g., stock, asset, merger, recapitalization), complex capitalizations, transactions involving multiple levels of debt and equity financing (including seller financing and public debt), reorganizations and management rollovers. We also represent management groups who are teaming with a private equity fund in a particular investment.


Fund Formation

Schiff Hardin attorneys have a long history of representing sponsors and other entrepreneurs forming private equity funds and other investment vehicles. Our attorneys have formed:

  • Traditional committed capital buyout funds
  • Funds of funds
  • Small business investment companies (SBICs)
  • So-called "one-off" or single investment funds

Schiff Hardin's depth of practice in tax, securities laws, the Employee Retirement Income Security Act (ERISA) and real estate in particular allows us to creatively address the many complexities of organizing these funds and other investment vehicles.


Portfolio Company Representation

Schiff Hardin typically serves as general counsel to the portfolio companies acquired by our private equity clients. When requested, we draw upon the skills and experience of our attorneys in offices nationwide to serve these firm clients with their day-to-day legal needs in matters involving contracts, labor, tax, employee benefits, environmental, real estate, intellectual property and litigation. We also represent these portfolio companies in the major events of their business life cycle, including acquisitions, dispositions, joint ventures, financings, workouts and exit transactions.


Public Market Transactions

Schiff Hardin's depth of experience in public market transactions, securities reporting requirements and corporate governance allows us to navigate the nuances and complexities of taking portfolio companies public.

Schiff Hardin represents portfolio companies and their owners in their initial and follow-on public offerings. In many instances, we serve as general counsel to the former portfolio company after it has become a public company.


Financings

Schiff Hardin has substantial experience representing senior lenders and mezzanine investors. That experience, together with our highly regarded borrower-side financing work for private equity funds and their portfolio companies, allows us to provide our clients with sophisticated, timely and efficient counsel.

We represent institutional investors and mezzanine and "hybrid" funds ranging in size from $50 million to more than $1 billion of committed capital, and have advised these clients on hundreds of mezzanine financings ranging in size from $3 million to more than $100 million.


Venture Capital Investments

Schiff Hardin represents venture capital investors, including funds, in their investment activities. As lead counsel to consortiums of venture capital funds, Schiff Hardin attorneys structure the investments as well as the relationships among the various venture capital funds. With particular emphasis on the period beginning in 1998, our attorneys have counseled venture capital clients through the many ups and downs of that period, including the changing transaction structures and dynamics as well as the workouts and restructurings necessitated by those challenging times.


Restructurings and Workouts

When the need arises during the course of an investment life cycle, Schiff Hardin's private equity clients and portfolio companies work closely with our Restructuring, Bankruptcy and Creditors' Rights group. This group draws upon its experience representing debtors and secured as well as unsecured creditors, and litigating the matters that arise in such representations, to counsel our private equity clients in workout and bankruptcy situations.


Representation of Private Fund Investors

Schiff Hardin has a long history representing university and other endowment funds, nonprofits, insurance companies, pension plans, funds-of-funds and other institutional investors in connection with their investments in private funds, such as private equity, leveraged buyout, real estate, venture capital, SBIC, mezzanine, distressed and hedge funds.

As a firm of more than 350 attorneys in Chicago, New York, Washington, Atlanta, San Francisco and Boston, we are able to provide our clients comprehensive legal solutions on a national scale in the multitude of areas that affect their private fund investments. We are called upon to address all phases of the investment cycle including:

  • Fund formation
  • Initial investment and subsequent capital calls
  • Operation of funds
  • Exits
  • Amendments of fund agreements and restructurings

We review and analyze our clients' proposed and existing investments in private funds with respect to all facets of the transaction. While we provide similar services to all of our institutional investor clients, our services vary to some extent depending upon the needs and concerns of each client. For all of our institutional investor clients, we the legal risks in the fund agreements in order for the clients to be able to take those risks into consideration when they are making business decisions regarding their investment. We have worked with many clients to develop particular investment platforms to address their economic and fund governance concerns. We then actively negotiate with fund sponsors and their counsel to conform the fund agreements as much as possible to these platforms before the clients make their investments.

Acknowledging that different institutional investors have different concerns that could lead to different priorities, we talk with our clients regarding their particular sensitivities. We also work with our clients to differentiate the importance of particular terms with respect to different classes of investment managers and types of investments. A particular client may in the case of an emerging manager, for example, place more importance on tightening the key person provisions and providing for an investor advisory board with greater oversight power than the same client would in the case of a more established brand name fund. Once the clients have invested in the funds, we advise them on issues that arise during the life of the funds. In every case, we strive to negotiate favorable yet fair terms for our clients.

Issues we frequently review and negotiate for our clients include:

  • Legal structures and tax issues,
  • Carry, compensation and expense reimbursement
  • Distribution, waterfalls and liquidation rights
  • Governance, voting and consent rights
  • Valuation, financial reporting, inspection rights and transparency
  • GP rights, obligations and exculpations
  • LP rights and obligations
  • Key person events, triggers and consequences
  • Self-dealing and affiliate transactions
  • GP and LP clawbacks
  • Exits, cause termination and no-fault divorce
  • GP removal
  • Co-investing

We take a team approach to our representation and draw upon the experience of our practice groups dedicated to the specialized needs of our clients including our nonprofit, securities, tax, ERISA, derivatives, finance and bankruptcy groups. In addition to providing cost efficiencies, this team approach allows us to bring particular legal and industry knowledge to our engagements.

We review a broad range of funds from first time venture capital funds being raised by emerging managers to well established name brand mega funds. Examples of funds on which we have recently worked for our clients include:

  • A multi-billion dollar real estate fund that was raising its sixth fund
  • A manager's second fund focused on private equity investments in Asia
  • A leveraged buyout fund focused on minority owned businesses
  • A hedge fund targeting distressed investments
  • A multi-billion dollar fund focused on investments in the energy industry
  • An emerging manager's first leveraged buyout fund focused on private equity investments in the Midwest
  • A venture capital fund focused on "clean tech" industries

As a result of the breadth of our clients' investments in private funds, we see a wide variety of private fund investment agreements. This exposure gives us a deep understanding of market terms and allows us to identify frequent points of negotiation in private fund investment agreements and develop solutions to such issues. When the ILPA principles were released, we were not surprised by the positions that ILPA advocated on behalf of the limited partner community because many were the same positions we have been advocating for years.

Working with our clients over the last several years, we have been successful in negotiating economic and operational terms in private fund agreements that are more favorable to limited partners than those typically found in agreements for funds raised prior to the economic downturn. For example, we have frequently negotiated interim general partner drawbacks, concessions regarding transaction fees, general partner removal provisions and changes to distribution waterfalls. Overall, we believe that fund agreements should be structured to align the economic interests of the private fund sponsors and those of the investors.

We routinely face complex investment structures and difficult situations. Our approach involves a seamless integration of multiple practice areas. Our knowledge of market trends combined with the perspective of past practice gives us a unique ability to service our clients’ needs efficiently. We pride ourselves on a longstanding track record of total client satisfaction.


Specialized Sale-Side Engagements

Through our many years in the investment field, Schiff Hardin has forged excellent relationships with many of the top financial advisors to the private equity community. We are often asked by these advisors to assist in the representation of companies where our depth and range of transactional experience is well-suited for the company considering a private or public exit.


Cross-Border Transactions

Schiff Hardin attorneys routinely represent clients in cross-border transactions. Whether on behalf of private equity clients or other firm clients, we engage in acquisitions, dispositions and joint ventures in Europe, Asia, Central and South America and Canada.