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Private Equity Toolkit
Practical Law Toolkit 8-501-5592 (Approx. 10 pages)
Private Equity Toolkit
by Practical Law Corporate & Securities
| Maintained • USA (National/Federal) |
Resources to assist outside and in-house counsel in understanding the fundamentals of private equity transactions. For a comprehensive list of available resources on this topic, see Private Equity.
A private equity transaction is an investment made by a private equity or venture capital fund and its sponsor or other institutional investors in illiquid, non-public securities issued by a private company or sometimes a public company. Common types of private equity transactions include:
- Start-up and early stage venture capital minority investments.
- Later stage, growth equity minority investments, including:
- equity investments or mezzanine investments to fund business expansion;
- distressed investments into financially troubled companies; and
- recapitalizations to fund existing stockholder liquidity.
- Buyouts, including leveraged buyouts and going private transactions.
Private equity transactions are quite complex and require legal expertise and general knowledge of a variety of topics, including mergers and acquisitions, debt finance, capital markets, and tax. Counsel involved in any aspect of private equity transactions should be familiar with these areas of law, as well as the current state of the private equity market.
Private equity investing is becoming increasingly regulated. Of particular importance, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act) imposed various measures relating to private equity and venture capital funds and the entities managing those funds. Among other changes, Dodd-Frank and the related rulemaking:
- Expands the group of investment advisers that must register with the Securities and Exchange Commission (SEC).
- Generally expands the jurisdiction of state regulators over investment advisers.
- Requires additional recordkeeping and reporting requirements for registered investment advisers to private funds.
- Mandates new examination and audit obligations for the SEC concerning private equity fund reporting.
- Modifies the qualifications for accredited investors under Regulation D and qualified clients under the Investment Advisers Act of 1940 (Advisers Act).