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Private Equity

Stock Purchase Agreement Series — Covenants

Having discussed purchase price adjustments, representations and warranties, indemnities, and closing conditions, I now turn to the last of the main sections of an acquisition agreement, the covenants. Whenever an acquisition is signed on one date and closed on another date, there will be a need for covenants to protect the purchaser(s) from certain acts that the seller(s) could do during the period from signing to closing, and vice versa.…

Stock Purchase Agreement Series — Closing Conditions

The closing conditions. The acquisition agreement for most private equity transactions will have, in addition to the bespoke representations and warranties, indemnities, and covenants, a raft of closing conditions. I suspect that a chapter, at least, would be necessary to do justice to this area of the acquisition agreement, but in the interest of brevity, I will confine myself to just one post.…

Stock Purchase Agreement Series — Indemnities

After navigating the minefield of the representations and warranties, you might be convinced that we have, like Odysseus, reached the shores of Ithaca. Nothing could be further from the truth. We now come to the next heavily negotiated part of the acquisition agreement: the indemnities. What function do the indemnities serve?…

Stock Purchase Agreement Series — Representations and Warranties

The representations and warranties contained in an acquisition agreement are a minefield, and you, my good reader, are the unfortunate sniffer dog being sent into the minefield to locate the mines. It is often the longest section of an acquisition agreement, and the content and the scope of the representations and warranties are extensively negotiated between counsel to the purchaser(s) and seller(s), as well as between the purchaser(s) and seller(s).…

Stock Purchase Agreement Series — Purchase Price

Negotiating purchase prices for private equity transactions can be an experience rather similar to being in a boxing ring. They are also often the subject of very lengthy and complex legal language in the acquisition agreement. The acquisition agreement provisions relating to the purchase price are some of the most complex and heavily negotiated provisions in a private equity acquisition agreement.…

Stock Purchase Agreement Series — Overview

The acquisition agreement is one of the most important transaction documents in a private equity deal. It is long, verbose, and difficult to understand without the benefit of years of deal experience. In light of my six years of experience doing deals in Asia and Europe, and in the spirit of Brad Feld’s excellent series of blog posts on term sheets, I’ve decided to write a series of blog posts on the acquisition agreement.…

Recycling Provisions in Private Equity Funds

Recycling provisions in a private equity fund’s limited partnership agreement are often subject to heavy negotiation between the general partner and limited partners. Recently, while taking Professor David Wessels’ excellent Venture Capital and the Finance of Innovation, I was reminded of one of the fund terms that often ended up being carefully scrutinized and negotiated by limited partners: the recycling provision.…

Thoughts on the State of the Private Equity Industry, 2016

With the coming of a new year, I’ve had some time to think about the state of the private equity industry—a dangerous pasttime, I know. Yet, it seems like a good time to set down some reflections on the state of the industry in 2015 and some thoughts for what may come in 2016, particularly in the areas of fundraising, valuations, sovereign wealth funds, and Asian private equity.…

A Short Note on Liquidation Preferences

Today, reflecting the fact that I am spending an inordinate amount of time at Wharton thinking about venture capital and startups (due in part to what I’m studying this semester and in part due to the fact that I’ve become more active in certain entrepreneurial circles), I’ve decided to take some time to talk about liquidation preferences and how they can affect the payouts to investors, management, and/or founders.…

Private Equity Co-investments

Co-investments have recently been in the news, with the pension plan of BT Group plc giving a £1 billion investment mandate to Hermes GPE, of which 50% will be allocated to co-investments. As someone who has done private equity, real estate, and infrastructure co-investments (among other investment strategies) in Europe and Asia for six years, I’ve learned a few lessons.…