Private Equity Exits
A Practical Analysis, Third Edition
New to the third edition is analysis on emerging and established trends impacting exit terms, including early management liquidity, the prevalence of insurance solutions and related party or fund-to-fund exits.
To the usual trade sales and initial public offerings (IPOs) have been added secondary, tertiary (and more) buy-outs, refinancings, partial sales, private equity house spin-outs, liquidations and an increasing number of “fund-to-fund” transfers. In these uncertain times, private equity houses will continue to put a significant focus on what options might be available to them to realise their portfolio investments, being mindful of not just the economic risks, but also the legal, tax, regulatory and reputational issues at stake. Management teams are key to this process and their economic, commercial and personal priorities cannot be underestimated in what is a very complex environment of often conflicting aspirations.
This practical guide features contributions by leading specialists (including from Latham & Watkins, Linklaters, Macfarlanes and Ropes & Gray) on a range of topics linked to the exit of private equity investments. Topics featured include preparing for exits, vendor diligence, management issues, auction sales, partial exits, private equity house spin-outs, IPOs, refinancing, winding-up, tax and perspectives from Luxembourg, the US and views on the emerging markets.
The third edition also includes analysis on emerging and established trends impacting exit terms, including early management liquidity, the prevalence of insurance solutions and related party or fund-to-fund exits.
Together, the contributors provide an invaluable guide to the legal, regulatory, tax and practical elements in play. Whether you are a lawyer in practice or in-house, this commercially focused title will provide you with an invaluable all-round overview of private equity exits.
Table of Contents
|Table of contents||3|
|Private equity house spin-outs||51|
|GP-led fund restructuring as a portfolio exit mechanism||69|
|Warranty and indemnity insurance||77|
|Private equity sponsored IPOs||91|
|Private equity exits: a Luxembourg perspective||179|
|US private equity exits: key differences from UK practice||207|
|Emerging markets exits||221|
|About the authors||229|
|About Globe Law and Business||248|
Partner and head of Private Funds practice in EMEA, Ropes & Gray
Tom Alabaster is a partner in and the head of Ropes & Gray’s Private Funds practice in EMEA. He is a specialist in the international structuring, marketing and operation of global private investment funds across a broad range of strategies. Tom is consistently recognised as a leading lawyer by clients and peers, and in industry publications such as Legal 500 (where he is identified as a “leading individual”) and Chambers UK where clients describe him as “absolutely awesome” and “the best funds legal adviser in London. Bar none”.
He is ranked as “highly regarded” by International Financial Law Review and was identified by Private Equity International’s Private Fund Manager as one of the global private fund industry’s top 30 under 40. Tom is a member of the legal and accounting committee of the British Venture Capital Association (BVCA) having previously served on the regulatory committees of the BVCA and Investment Europe. Prior to joining Ropes & Gray, Tom served as an investment funds partner at another global law firm in London and also as an in- house funds lawyer and Europe and Africa CCO at The Carlyle Group.
Partner, Arendt & Medernach
Pierre Beissel is a partner and a member of both the Corporate Law, Mergers and Acquisitions and the Private Equity and Real Estate practices of Arendt & Medernach. He advises private equity firms, hedge funds and real estate funds on funds structuring and formation as well as on the structuring and financing of international buy- out transactions, joint ventures, corporate reorganisations and corporate governance matters.
Pierre is an active member of the Luxembourg Private Equity Association and of the American Bar Association. He has been a member of the Luxembourg Bar since 1999 and of the New York Bar since 2001. He holds a master’s degree in law, a diplôme de juriste conseil d’entreprise (DJCE) and a diplôme d’études supérieures spécialisées in business law (DESS droit des affaires) from the Université Montpellier I (France), as well as a Master of Laws degree (LLM) from Cornell Law School (USA). Pierre speaks English, French, German and Luxembourgish.
Financial sponsor and corporate partner, Linklaters
Chris Boycott advises private equity houses, financial sponsors and their investee companies on public and private M&A, joint ventures and other strategic transactions across a broad range of sectors and geographies. He has extensive experience advising financial sponsor clients on realising their investments by way of dualtrack exit processes.
Partner, Latham & Watkins
Neil Campbell is a partner in Latham & Watkins’ London office focusing on complex cross- border private equity, infrastructure and M&A transactions. Neil has been recognised by Legal Week as a rising star in private equity and regularly acts for large private equity houses on their most significant transactions. He has contributed to the Globe Law and Business sister publication: Private Equity: A Transactional Analysis.
Partner, Taylor Wessing LLP
Emma Danks is head of Taylor Wessing’s private equity team and co- head of their global corporate/ M&A group. She is recognised as one of the UK’s leading private equity lawyers and is described by clients as bright, commercial and solutions focused. Emma is well known for her work with private equity sponsors and their portfolio companies, having acted on a wide range of leveraged buy-outs and related transactions. She also frequently advises private equity- backed management teams on buy-out transactions and equity plans.
Emma was listed in The Lawyer’s Hot 100 for 2018, and in the Legal Business feature on the City’s female deal stars. Her team’s buy-out expertise was recently recognised when they were named Private Equity Team of the Year at the British Legal Awards.
Partner, CMS Cameron McKenna Nabarro Olswang LLP
John Dawson is a partner in the corporate and leverage finance group at CMS Cameron McKenna Nabarro Olswang LLP in London. He holds an MA in jurisprudence from the University of Oxford and has advised borrowers, lenders and investors on the full spectrum of financings in the private debt markets for over 20 years. In particular, John has extensive experience advising on public and private acquisition financings, fund financings and special situations lending and restructurings. His clients include leading venture capital firms, private equity funds, hedge funds, commercial banks, investment banks and corporate borrowers in the UK, Europe and internationally. With his experience in special situations and distressed debt he delivers comprehensive, end- to- end solutions for complex financing and restructuring transactions. He regularly supports his sponsor clients through exits in the public and private markets.
John lectures on acquisition finance as part of the MA in corporate law at the University of Cambridge and as part of the MSc in law and finance at the University of Oxford.
Partner, CMS Cameron McKenna Nabarro Olswang LLP
Patrick Donegan is a partner in and leads the corporate and leverage finance group at CMS Cameron McKenna Nabarro Olswang LLP in London. He holds degrees in law and economics from the University of Queensland and has a wide range of experience in corporate, leveraged and structured financings and restructurings. With a particular focus on the infrastructure and energy sectors, Patrick’s clients include sponsors and infrastructure investors and funds, commercial and investment banks and other financial institutions, regulated utilities and corporate borrowers. Using his detailed sector knowledge Patrick delivers tailored financing packages and solutions within the complex transactions acquisitions, refinancings or restructurings on which he advises. Patrick regularly authors articles on market updates and developments.
Partner, Macfarlanes LLP
Stephen Drewitt is a partner in Macfarlanes’ corporate and M&A team. He specialises in private equity, acting predominantly for private equity sponsors, such as Epiris and Caledonia, and other institutional investors. With over 25 years’ experience, Stephen has developed particular expertise in relation to private equity investment in companies in the financial services sector, both in the UK and internationally.
As well as authoring a chapter in this edition, he is also the author of a chapter in The Private Equity Review. Stephen is a ranked lawyer in Chambers and Partners, Private Equity UK-wide.
Tom D Evans
Partner, Latham & Watkins
Tom D Evans is a partner at Latham & Watkins with almost two decades’ experience acting on all forms of private equity transactions, from venture and growth capital to complex cross- border mergers and acquisitions and financing arrangements. He has contributed to the Globe Law and Business sister publication, Private Equity: A Transactional Analysis, and is recognised as a leader in his field.
Partner, Latham & Watkins
Sean Finn is a partner in Latham & Watkins’ London office and advises a wide range of clients on all aspects of corporate, finance and business taxation. Sean is a member of the Chartered Institute of Taxation. Sean has particular expertise in advising on tax aspects of private equity transactions, mergers and acquisitions, reconstructions, joint ventures, reorganisations, financings, refinancings and restructurings and workouts.
Associate, Simpson Thacher & Bartlett LLP
Lucy Gillett is an associate in the corporate team of Simpson Thacher & Bartlett LLP’s London office. She represents a range of clients, with a particular focus on private equity and other financial sponsors, and advises on complex cross- border M&A transactions, both public and private, as well as IPOs, other equity capital markets transactions and general corporate matters.
During her time at the firm, Lucy has undertaken two six- month secondments with a client, where she worked on multiple complex M&A transactions and a number of commercial matters. Prior to joining Simpson Thacher & Bartlett LLP in 2014, Lucy practised at a leading global law firm, in their London, Moscow and Dubai offices.
Counsel, Arendt & Medernach
Claire Guilbert is a counsel in the Private Equity and Real Estate practice of Arendt & Medernach. She specialises in the structuring and launch of investment funds and fund managers, ensuring that clients address all relevant regulatory, corporate and operational aspects. She has particular expertise in private equity, debt and real estate strategies. She also assists with downstream transactional investment structuring. She has been a member of the Luxembourg Bar since 2012. From January 2015 to June 2016, Claire was seconded to Arendt & Medernach’s representative office in New York to assist US- based clients in the performance of fund structuring and transactions having a Luxembourg component.
Claire holds a master’s degree in international and European business law from Université Nancy II (France) as well as a Master of Laws (LLM) from Westminster University (United Kingdom). Claire speaks French, English and German.
Partner, Clifford Chance LLP
Philip Hertz is global head of the Restructuring and Insolvency practice at Clifford Chance LLP. His practice involves complex cross- border insolvency and restructuring work. He is a member of the Association of Business Recovery Professionals (R3), INSOL and the Insolvency Lawyers’ Association (ILA).
Philip is a past ILA president and a continuing member of the Insolvency Lawyers’ Association Council and he also continues to serve on its technical committee. He is consistently recognised as a leading lawyer by clients and peers and in industry publications such as the Legal 500 where he is identified as a Leading Individual and appears in the Hall of Fame for Corporate Restructuring and Insolvency. He is the co- author of the chapters entitled “Schemes of arrangement” in Tolley’s Insolvency Law and “Compromising shareholder claims both generally and in listed companies” in The Law and Practice of Restructuring in the UK and US, as well as numerous articles on insolvency- related topics.
Philip’s recent experience includes advising senior creditors’ committees, companies and private equity houses in relation to the restructuring of a number of distressed international groups.
Partner, Latham & Watkins
Kem Ihenacho is the global vice chair of the Private Equity practice. He is an M&A lawyer with more than 20 years of experience, focusing on complex cross-border private equity, infrastructure and M&A transactions. Kem is recognised as a leader in his field by numerous publications. He is listed in the 2015 The Lawyer’s Hot 100 list as a private equity star, and Chambers Global 2017 recognised him as an Africa Expert, stating: “He’s highly commercial, very experienced and knows the markets inside out.”
Associate, Howden M&A
Sachin Kucheria is an associate at Howden M&A. Prior to joining Howden M&A, Sachin undertook a variety of work placements including internships within private equity and insurance. At Howden M&A, Sachin works in the private equity team with a focus on placing W&I policies for transactions in the UK and continental Europe. Sachin has a BSc in mathematics with statistics from the University of Nottingham.
Partner, Clifford Chance LLP
John MacLennan is a partner in Clifford Chance’s restructuring and insolvency group in London. He specialises in complex international and domestic restructuring and insolvency, advising lenders, companies, directors, private equity sponsors, funds, alternative investors, insolvency officeholders, government institutions and other stakeholders. John has also spent a period working as a restructuring banker on secondment to the restructuring team of a leading UK clearing bank. As well as being published in restructuring and insolvency and finance and banking journals, he is a member of the Association of Business Recovery Professionals (R3), the Insolvency Lawyers’ Association and INSOL.
John is consistently recognised as a leading lawyer by clients and peers and in industry publications such as the Legal 500 where he is identified as a Leading Individual.
Partner, Simpson Thacher & Bartlett LLP
Amy Mahon is a partner in Simpson Thacher & Bartlett LLP’s London office. She advises a range of clients including private equity firms on complex domestic and cross- border private equity transactions including M&A, leveraged buy-outs, private equity, infrastructure and consortium transactions. She has represented financial sponsors through all stages of the investment cycle across a range of sectors including highly regulated transactions. Amy is chair of the Legal and Accounting Committee of the BVCA. Amy is recognised as a leading practitioner by Chambers UK for both private equity and infrastructure where clients say “she is brilliant technically, commercial and user- friendly”.
Senior associate, Latham & Watkins
Maarten Overmars is a senior associate in Latham & Watkins’ London office and focuses on private equity. He frequently acts for private equity sponsors on complex carve- out transactions across a wide range of industry sectors. He is admitted to the bar in both England and Wales and the Netherlands. Maarten has contributed to the Globe Law and Business sister publication: Oil & Gas M&A: A Practical Handbook.
Counsel, Ropes & Gray
Lavanya Raghavan is counsel in Ropes & Gray’s asset management practice in London. Lavanya has a broad- based investment funds practice, advising sponsors of private funds on fund formation, co- investments, carried interest and executive participation schemes, and governance matters. Lavanya routinely represents institutional investors in connection with investments in and alongside funds, as well as secondary transactions relating to investors’ fund interests. Lavanya takes an active interest in pro bono matters. Lavanya obtained her undergraduate degree in economics from Yale University in 2008, and her legal qualifications from the University of Law in London in 2010.
General counsel, Howden M&A
Caroline Rowlands is general counsel at Howden M&A. After training and qualifying as a solicitor at Freshfields Bruckhaus Deringer, Caroline joined the Howden M&A team as a broker in the W&I team. Prior to taking on the role of general counsel, Caroline led Howden M&A’s UK private equity practice. Caroline has an MA in law from Cambridge University.
Knowledge director, Clifford Chance LLP
Gabrielle Ruiz is a knowledge director at Clifford Chance LLP. She has over 24 years’ experience, specialising in all aspects of corporate restructuring and insolvency law. Gabrielle is the co- author of “Compromising shareholder claims both generally and in listed companies” in The Law and Practice of Restructuring in the UK and US, and also co- author of “An overview of corporate restructuring and insolvency law in England and Wales” in Global Insolvency and Bankruptcy Practice for Sustainable Economic Development: International Best Practice, as well as numerous articles on insolvency- related topics in restructuring and insolvency and finance and banking journals. She is a member of the Association of Business Recovery Professionals (R3) technical committee, as well as the Insolvency Lawyers’ Association, where she serves also on its technical committee. Gabrielle is a member of INSOL.
Partner, Latham & Watkins
Howard Sobel is a partner in the New York office of Latham & Watkins. He advises US and international private equity firms in leveraged acquisitions of privately held and public companies. A nationally renowned private equity practitioner, Howard handles a diverse range of matters, including auctions, going- private transactions, co- investment opportunities, acquisitions and reorganisations in bankruptcy proceedings. He has represented many of the world’s leading private equity firms, such as Leonard Green & Partners, Odyssey Investment Partners, Cinven Partners, CVC Capital Partners, Centerbridge Partners, Irving Place Capital, Vestar Capital Partners, Permira Advisers and Ares Management. Howard offers particular experience in transactions involving the healthcare, business services, and retail and consumer sectors. He previously served as global co- chair of Latham & Watkins’ Private Equity practice. Prior to entering private practice, Howard was a law clerk to Judge Edwin D Steel, Jr, of the US District Court of Delaware from 1978– 1979.
Vi Thai Tran
Associate, Latham & Watkins
Vi Thai Tran is an associate in the New York office of Latham & Watkins. Her practice focuses on mergers and acquisitions, including leveraged buy-outs, joint ventures, minority investments and other general corporate matters on behalf of private equity sponsors and their portfolio companies. Vi has experience across a range of sectors including healthcare and energy. Her experience also includes advising on fund formation and co- investments.
Partner, Latham & Watkins
Linzi Thomas is an M&A lawyer with more than ten years of experience advising clients primarily on private equity transactions, cross- border mergers and acquisitions, and general corporate matters. Linzi is recognised as one of the 40 Under 40: The Rising Stars in Private Equity 2019 by Legal Week, listed in The Lawyer Hot 100 2020, and ranked as a Next Generation Partner for Private Equity in the Legal 500 UK 2020.
ECM and corporate partner, Linklaters
Tom Thorne is a partner in the corporate department of Linklaters in London who specialises in equity capital markets and listing rules-driven transactions. He regularly advises on IPOs, dual- track processes, private placements and secondary capital raisings. His clients include issuers, investment banks, financial sponsors and other stakeholders. Tom also provides general corporate advice to a number of listed clients.
Partner and head of European Private Equity, DLA Piper UK LLP
Tim Wright heads DLA Piper’s European PE team – which for each of the last three years has acted on more European PE exits than any other law firm (2018– 2020 – mergermarket). Since first becoming a partner in 2001, Tim has acted on over 130 M&A transactions acting for a wide range of PE houses, founders and management teams ranging from small domestic disposals up to €10 billion multi- jurisdictional transactions. Tim also co- authors DLA Piper’s annual Global M&A Intelligence Report which draws on a database of over 3,000 deals to deliver a real view on what is really market when it comes to legal deal terms.