Our Private Investment Funds Practice focuses on the creation, fundraising and ongoing representation of a broad range of funds across multiple industries. We represent leading institutions in a wide variety of private investment funds, including private equity and venture funds, real estate funds, hedge funds, mezzanine debt funds and international funds. We have organized funds ranging in size from less than $15 million to in excess of $3 billion and with varying strategies for fundraising (pension funds, institutional investors, corporate strategic investors, state retirement plans and high net worth individuals) and investing capital (domestic and international private equity, real estate, public securities and debt securities).
We also represent state retirement plans, foundations, private pension plans and other institutional investors in private investment funds. Representing both fund managers and institutional investors across multiple industries allows us to draw on a broad range of experience to develop creative solutions for structuring, marketing and operating private investment funds that will work for both fund managers and investors.
Fund Formation
Our fund formation work involves an interdisciplinary group within Goodwin Procter that includes attorneys specializing in ERISA, U.S. and international taxation, banking regulations, the Investment Company Act and other securities laws. Our interdisciplinary, cross-industry approach allows us to apply both the legal and industry expertise necessary to address the complex issues inherent in private fund formation and to advise clients on market trends and strategies for many types of funds. We emphasize a team approach to serving clients and are proud of our reputation as pragmatic, results-oriented professionals.
Fund Management
Our fund formation attorneys guide clients beyond the formation of funds and into the ongoing work of operations and compliance. Our breadth of expertise and interdisciplinary approach to knowledge development and sharing result in sophisticated methods for issue identification and resolution to address the ongoing needs of our fund manager clients.
We work with fund managers to establish compliance programs relating to federal securities laws and securities trading (Securities Exchange Act of 1934 filings, registration and exemptions under the Securities Act of 1933, insider trading policies, trading “screens” and restricted lists); investment adviser regulation and registration; CFTC compliance for commodity pool operators; antitrust issues; and other regulatory schemes.
We also advise fund managers on establishing parameters for remaining in compliance with contractual restrictions under fund documentation, as well as VCOC and REOC compliance tracking and policies, and structuring investments in the context of restrictions on unrelated business taxable income or similar prohibitions. Other issues that arise include the allocation of investment opportunities and designing policies aimed at meeting fiduciary and contractual requirements where multiple funds with differing investment objectives have been established. We also advise fund managers on a range of special situations having regulatory or compliance implications, such as proxy solicitation rules and antitrust or HSR filings.
Sponsor Compensation
Investment management executives often receive the most significant component of their compensation in the form of a share of profits in the funds that they or their employers sponsor. These arrangements are frequently structured as carried interest in partnerships permitting the executives to enjoy long-term capital gains treatment on much of the value they ultimately receive.
Many of our assignments in forming private funds involve creating employee holding entities to implement this type of incentive compensation arrangement, and we are familiar with the securities, tax and business issues these arrangements present. We also have worked with sponsors to implement tax efficient structures for using management fees to fund sponsors’ capital commitment obligations and to minimize the tax burdens associated with the receipt of management fees and the carried interest.
Hedge Funds
Investment managers look to our Fund Formation Practice for legal advice and practical guidance in the structure, organization and distribution of hedge funds and funds of hedge funds. We also assist with numerous compliance matters, including SEC and CFTC registration and compliance issues for the management company, as well as operational and trading issues, such as antitrust, bankruptcy and similar regulatory analysis in connection with arbitrage or other event-driven strategies, and various filing, recordkeeping and reporting requirements. Our expertise also extends to structure and compensation issues for the management company and its owners, including deferral arrangements and other tax planning strategies.
We have organized hedge funds and organized and acquired hedge fund managers for numerous large financial services firms, and we regularly work with investment managers seeking to create a new business line or portfolio managers establishing a new company. We also represent institutional investors investing in hedge funds. Our hedge fund clients employ a variety of strategies and seek a broad range of risk/return objectives.
Real Estate Funds
We have structured and documented a wide variety of funds for various real estate investment strategies, including limited partnerships for core, opportunistic and real estate securities strategies, REITS and UPREITS with a variety of approaches to governance, group trusts for pension fund investors, and open-end mutual funds for high-yield CMBS investments. Some of our funds have tiered structures allowing sponsors to offer specialized products to different investors or to use appropriate vehicles for different types of investments. We are familiar with the specialized tax and ERISA issues applicable to funds with real estate strategies, as well as lines of credit often used by such funds. We work with both established fund sponsors and seasoned professionals forming new firms to raise their first fund.
Private Equity and Venture Funds
We have formed private equity funds for many of the leading buyout and venture capital fund managers. We have expertise in the formation of private investment funds for early stage/angel financing, venture capital, buyouts and strategic financing. Our clients include fund managers and private equity investors throughout the country as well as international fund managers raising capital or investing in the United States.
Our fund formation attorneys draw upon the depth and breadth of our Corporate, Tax and ERISA Practices to combine the range of legal expertise required to successfully structure and close private equity funds. Our experience with a broad range of private equity funds and investors enables us to creatively structure funds that will meet the specific securities, tax, ERISA and other regulatory concerns of institutional and high net worth individual investors in the United States and abroad.
International Funds
Goodwin Procter is internationally known for working with offshore funds and global investment management firms. We are among a small number of U.S. law firms that have substantial experience working with the laws of major foreign markets and key offshore domiciles, tailoring fund structures and domicile selection to a fund’s investment program and investor base. This experience enables us to identify potential structural and compliance issues associated with global fund offerings and to interface effectively with local counsel to resolve regulatory issues in multiple jurisdictions.
Our expertise in the offshore fund arena is also illustrated by our work in obtaining two landmark no-action letters from the Securities and Exchange Commission that define the application of U.S. securities laws to multi-jurisdictional offerings.
Institutional Investors
We leverage our experience in private fund formation though our representation of several of the largest U.S. corporate and state pension funds in connection with their private equity investment programs. Our work for these clients includes the review and negotiation of financial and legal issues in fund agreements, utilizing our knowledge of rapidly-evolving market terms and conditions. In this process we draw on our extensive experience with the complex regulatory, fiduciary and tax issues that affect ERISA, governmental and foundation investors. less »