Tax and Business Related Considerations for Private Equity and Other Investment Funds Jonathan W. DePriest Chamberlain, Hrdlicka, White, Williams & Aughtry

Tax and Business Related Considerations for Private

Equity and Other Investment Funds

Jonathan W. DePriestChamberlain, Hrdlicka, White, Williams & Aughtry

Tax Executive Institute – Denver ChapterFederal Tax Day – December 10, 2013

2

Basic Structures PE Funds

Structure of the PE fund itself will depend upon the nature of its investors:– US domestic taxable– US domestic tax-exempt– Foreign (and from which jurisdictions)

AND the nature of its target (investee) portfolio companies– Foreign/Non-US– Domestic C Corporation– Domestic Partnership

3

Basic Structures for PE Funds

Partnership

Principals/Individuals

Manager Partnership or S Corporation

Management G.P.

Target Investments

Certain Non-U.S. Investors, and U.S.

Investors

Non-U.S. Investors

Feeder Corporation(Non-U.S.)

Fee for management services

x% and carriedinterest

4


Investor Tax Issues– Non-US Investors

• Avoid ECI• Avoid FIRPTA• Avoid filing US returns

– Results often in using a foreign “blocker” usually organized in a tax haven jurisdiction

– Parallel and co-investment structures often necessary

5


Investor Tax Issues – Continued– US domestic taxable investors

• PE fund itself should not bear tax• Pass-through of capital gains and losses• Minimization of “phantom” income• No reporting obligations or tax payment obligations

in non-US jurisdictions (or if incurred, ability to use foreign tax credit)

• Avoid investing in CFCs (parallel foreign partnership structure for non-US investments)

6


Investor Tax Issues – Continued– US domestic tax-exempt investors

• Avoid investments in operating partnerships (UBTI)• Avoid unrelated debt-financed income (UDFI)• Avoid fees for services (UBTI)• Avoid certain insurance income

7


Use of Swaps– Blocker companies interpose additional level

of tax– Use of total return swap (TRS)

• Investor puts up cash collateral for a notional investment, and typically pays interest on the notional amount (sometimes net of collateral)

• Institutional counterparty will hedge with investment notional amount in PE fund

• Desire for full collateralization risks recharacterization

8


Use of Swaps – Continued– Industry Director Directive (IDD) on use of

TRS by foreign investors• Avoids 30% withholding tax• Likely too risky

– Use of TRS by US TEIs• Fairly common for private funds of MLPs• Applicable to PE funds

9


Management Fees and Carried Interests– Limited partnership to receive management

fees – 1% LLC general partner subject to self-employment tax, limited partnership exception under Section 1402(a)(13) for LP share

– Investment entity to invest the manager’s capital commitment and receive carried interest, exceptions for self-employment tax under Section 1402(a)(2) and (3)

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Corporate vs. Partnership Structures for Target (Investee) Portfolio Companies held by PE Funds

Corporate is more traditional, and frankly presents fewer issues– Investment by PE Fund in US domestic C

corporation often takes the form of preferred stock

– Possible combination with debt

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Corporate vs. Partnership Structures for Target (Investee) Portfolio Companies held

by PE FundsTypical features of Preferred Stock

– Dividends– Liquidation Preference– Redemption Rights– Conversion rights and related anti-dilution

protections

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by PE FundsPreferred Stock Dividends

– Cash– Payment-in-kind (PIK)– Cumulative or Compounding

• When as and if declared by the Board will generally mean taxable upon receipt

• Automatic increase to the liquidation preference generally means taxable as they accrue

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by PE FundsPreferred Stock Dividends

– Treatment of Preferred Stock as “tax common” by adding participating features• Double dip – participation in dividends with

common on as-if converted basis• Participation on liquidation of the greater of

liquidation preference or what holder would be entitled to receive on as-if converted basis

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by PE FundsTax Common

– Allows deferral of tax on PIK dividend– Avoids OID issues with redemption premium

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by PE Funds Traditional LTEIPs are more easily accomplished

Most are familiar with qualified stock options PE views on vesting, forfeiture, Liquidity Events

Sale of company vs. IPO

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by PE Funds

Partnership is more and more prevalent among operating companies and their owners, and from the private equity fund’s perspective presents conflicts among– U.S. domestic taxable investors– U.S. tax-exempt investors– Foreign investors

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by PE Funds

Debt: Contingent Interest– Expressed as the greater of a fixed

percentage interest rate or contingent interest– Contingent interest expressed as a

percentage of adjusted gross revenue– Not unlike the NPI discussed below– UBIT Avoidance for TEIs

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by PE FundsPreferred Equity in a Partnership

– Allocations of taxable income to support preferred return upon liquidation (liquidation is in accordance with capital accounts)

– Works well if income is growing– Capital accounts must be reflective of the

relative rights and preferences upon liquidation

– Getting through the waterfall

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by PE Funds

– Can lead to unexpected results and incentives• Amortization of goodwill for acquisitions• Smaller, one-off acquisitions

– Sale of Personal Goodwill– Sale of Option– Risk of Recharacterization

• Payment for Non-Compete vs. Compensation• Management vs. Investor Perspectives on

Distributions• PE investors must mark their portfolios and

EBITDA will be critical

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by PE Funds

– Management LTEIP Structures• Grants of Partnership Interests• Options Plans• Profits Interests• Bonus plans• Management Challenges Relating to All of the

Above– Valuation, rebooking and phantom Income issues– Earnings hits for EBITDA – consider GAAP and tax– “Survivor” mentality for who is actually there for a

Liquidity Event

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by PE Funds

State and Local Tax (SALT) Issues in Partnerships Depending upon nature of investments, state tax

filings could be triggered in multiple jurisdictions Multiple flow-through portfolio companies in multiple

jurisdictions

Even for de minimis amounts, penalties can be significant and lead you to file – the analysis must be undertaken

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Real Assets: Oil & Gas Working Interests

Net Profits Interest Conveyance– Fund for Domestic Taxable Investors acquires

a Working Interest– Such Fund conveys Net Profits Interest in the

Working Interest to a parallel fund for TEIs to allow them to invest without generating UBTI

– NPI must relate to real estate– TEI Fund lends taxable fund cash sufficient to

finance tangible personal ppty

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• Accounting and Expense Allocation Issues• Administrative Issues, including multiple closes

and potential need for revaluation• Use of NPI Calculation Agent• Cannot add or pull out properties within an NPI

conveyance after it is constituted

– PLP Structure to Accommodate Financing for TEI Fund

– Making Taxable and Tax-Exempt Funds Economically Equivalent


Acquisitions & Financing Structure

PLP

EnergyFund GP, L.P.

EnergyFund II-A, L.P.

Taxable Investors

Tax-Exempt Investors

EnergyFund II-B, L.P.

Lender 2

PLP L.P.Lender 1

Seller

25

Real Assets: Timber

TIMOs – Timber Investment Management Organization– Actual silvicultural management, timber

cruises, etc. handled by the TIMO– Some infrastructure and staffing to evaluate

HBU plays

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Real Assets: Timber

631(a) vs. 631(b) cutting contracts– Wood supply agreements are one of two types,

delivered log contracts under Section 631(a) of the Code—the owner harvests the timber and sells the cut logs—and pay‐as cut or lump sum contracts under Section 631(b) of the Code—the purchaser harvests the timber and pays for what has been cut and the owner has a “retained economic interest” in the timber, or the owner sells standing timber “outright” for a lump sum.

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Real Assets: Timber

– 631(b) cutting contracts “pay as cut” or “lump sum” contracts produce income which is passive income under Section 512(b) and not UBTI in the hands of tax-exempt investors

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Real Assets: Timber

HBU Sales – care to avoid treatment as a “dealer” to avoid generating UBTI and preserve LTCGs Partnership agreement provisions confirming

investment purpose Use of SPVs for various holdings, tracking time and

efforts for HBU sale to show minimal nature

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Real Assets: TimberHBU Sales

Various factors considered, with frequency and substantiality of sales being most important Nature and purpose of acquisition of ppty and

duration of ownership Nature and extent of taxpayer’s efforts to sell ppty Number, extent, continuity and substantiality of the

sales Extent of subdividing, developing and advertising to

increase sales Use of business office for sales Time and effort habitually devoted to sales

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Real Assets: Other

Financial distress in municipalitiesFocus on key infrastructure assetsGood match for large state pension funds

– Airports– Railways– Toll Roads (mixed bag)

Professional managementPolitical challenges vs. economic reality

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ERISA Considerations

VCOC- by taking an active role in the management of portfolio companies, PE funds may rely on an exemption from ERISA for “venture capital operating companies”– At least 50% of assets must be invested in

“venture capital investments”– Must exercise “management rights” with

respect to one or more of the operating companies in which it invests

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REOC– Real estate funds seek to rely on an exclusion

from ERISA for “real estate operating companies”• Must invest at least 50% of assets in real estate

that is managed or developed and for which the fund has the right to substantially participate in the management or development activities

• Delegation is possible, so long as the fund has the right to terminate at will and actually supervises

33


Section 408(b)(2) Regulation 2550.408b-2(c) requiring covered Service Providers to make specified periodic disclosures to covered plans, mainly around compensation arrangements

34


Significant Participation Test– A private fund is generally able to avoid

ERISA’s application if it limits the level of investment by benefit plan investors to less than 25% of any class of the fund’s equity

35


Significant Participation Test– Count all Benefit Plan Investors

• Employee Benefit Plans subject to ERISA• Taft-Hartley (multi-employer) Plans• Certain church plans• IRAs – this is an easy one to miss!

– Importantly, government plans (e.g., CALPERs, Colorado PERA) don’t count

36


Significant Participation Test– Disregard Investments by manager and

affiliates (they are not counted in the denominator to calculate the 25%)

– Test on a Class Basis– Continuous monitoring required

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Assuming the private fund meets the significant participation test, relief can be found from the prohibited transactions relating to parties in interest through status as a QPAM or Qualified Professional Asset Manager.

38


QPAM Status– Registered Investment Adviser; AND– Must have in excess of $85 mm in client AUM

as of the last day of most recent FY; AND– Must have partner/shareholder equity in

excess of $1 mm as of the most recent balance sheet prepared in accordance with GAAP

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Other Consequences of holding plan assets– Performance Fees– Use of Affiliated Brokers– Cross Trades– Principal Transactions– Custody– Employer Securities– Expenses

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Other consequences of holding plan assets continued– Expenses– Indemnification– Potential Plan Sponsor Liability– Co-Fiduciary Liability– Fidelity Bonding– Information Reporting

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Performance Fees permissible if– Fund manager is an RIA– Decision to hire Fund manager (i.e., to invest

in the Fund) and to pay performance fee made by independent fiduciary of each benefit plan investor

– Each benefit plan investor has total assets of at least $50 mm

– Investor can withdraw from the Fund on reasonably short notice

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Performance Fees Continued– Arrangement complies with Advisers Act Rule

205-3– Total fees paid do not exceed reasonable

comp– Fund manager or affiliates do NOT act as

market maker for securities transactions by Fund

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Performance Fees Continued– Perf Fee determined on annual performance,

taking into account both realized and unrealized gains and losses, and where termination date is other than an anniversary date, net profit is determined from the beginning of the prior full year through termination date

44


Performance Fees Continued– FINALLY, each benefit plan investor’s

fiduciary represents that it fully understands the formula for calculating the perf fee and the risks associated with such arrangements

These criteria ONLY APPLY if the manager is an investment manager under ERISA, which it would not be if the significant participation test is satisfied.

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Other Investment Fund Considerations for Partnerships: PTP Rules under 7704

Under IRC Section 7704, a partnership with more than 100 investors will be treated as a “publicly traded partnership” and taxed as a corporation if interests in the partnership are traded on an established securities market or a secondary market or the substantial equivalent of such a market.

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Options?– Limit income to “qualifying income”

• Can be difficult to achieve 90% or more gross income as investment-type income

• Commodities don’t generally qualify• Mezzanine financings don’t generally qualify

– Limit withdrawals to redemption and repurchase safe harbor

– Limit the number of investors to 100, per the private placement safe harbor

47


Resulting Practice: Strict Adherence to Private Placement Safe Harbor for Institutionally-Oriented Funds to support a “will” tax opinion– Use of Multiple Funds with 100 partners– Modifying Investment Strategies (particularly

targeted volatility levels) among funds to distinguish them

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For PE funds, strict policing of transfers and secondary transactions is needed to establish that the substantial equivalent of a secondary market does not exist, where the PE fund has more than 100 partners

Contrast with secondary managers with significant funds to deploy

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Growing use of Commodities– 90% Qualifying Income under 7704(d) –

relevant if a partnership exceeds 100 partners and permits withdrawals more frequently than quarterly, outside of the redemption and repurchase safe harbor

– Commodities-related income and gain is only Qualifying Income if “a principal activity” of the partnership is buying and selling commodities or options, futures or forwards with respect to commodities

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– Scant Guidance as to what “a principal activity” means• Examples from Percentage Holdings• Dedicated Investment Team Members (those

holding a Series 3 license)• Number of Trades• % of absolute value of gains and losses generated

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Other Investment FundConsiderations for RICs

Regulated Investment Companies registered under the 1940 Act and electing to be taxed as RICs under Subchapter M. 90% of its gross income must be “Qualifying Income”

under IRC Section 851(b)(2). Asset diversification test Year-end distribution obligation to distribute 90% of its

realized taxable income for the taxable year

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Qualifying Income: 90% of a RIC’s gross income must be derived annually from the qualifying income sources enumerated in IRC Section 851(b)(2).– Notably absent from the list are income and

gains on commodities– Commodities are not “securities” under 2(a)

(36) of the 1940 Act

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Other Investment Fund Considerations for RICs

Growing Use of Commodities for Liquid Alternative Strategies– Use of offshore subsidiary blockers

• CFC, Subpart F Income will be includable in gross income of the RIC

• So long as currently distributed, it will be Qualifying Income

• Limited to 25% of total asset value as of the end of each quarter of each tax year (includes assets held as collateral for derivative positions).

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– Use of Commodity-Linked Notes (CLNs)• RIC pays issuer par value upon purchase, and

receives par value back from issuer at maturity, adjusted up or down by the product of (1) par value, (2) change in value of a commodity index, and (3) a leverage factor not to exceed three.

• Additional debt-like features– Interest payments– Early redemption feature for principal protection– No more than three year maturity

• Status as a “security” somewhat unclear, but it is the basis of status as qualifying income

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Recently Proposed Rules for RICs holding MLPs

In recent years, MLPs have grown in popularity as an investment because of their yield.

56


Closed-end Funds and Open-End Funds have been launched to invest a significant portion of their portfolios in MLPs. Many of these funds are structured as RICs; some are structured as C corporations.

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For those that are RICs, under Section 851(b)(3)(B), to qualify as a RIC, a fund must have not more than 25% of its total assets in qualified publicly traded partnerships (as defined in Section 851(h)). This is part of the “asset diversification test.”

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Some industry participants structured as RICs used a subsidiary C corporation to increase exposure to MLPs above the 25%.

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On August 2, 2013, the Service proposed regulations under Section 851(c) regarding the definition of a “controlled group” for purposes of the asset diversification test, to provide a “look through” for the investments of subsidiary C corporations.

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Public hearing scheduled for December 9, 2013.

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Side Letter Practice Among Institutional Investors

Requirement for Legal Opinions Delaware law corporate opinion covering due

authorization and enforceability of the side letter Rubber hits the road on fiduciary issues

Tax opinion as to partnership status Rubber hits the road on 7704 PTP safe harbors FIN 48 interplay on tax positions taken at fund level

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Side Letter Practice AmongInstitutional Investors

Transparency into fund portfolio– More sophisticated risk management

protocols require real time information– Issues with other investors– Provide all investors with same information– Use of aggregation services

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Accelerated or Enhanced Liquidity/Withdrawal Rights Issues for other investors: the GP’s fiduciary

responsibilities If registered under the Advisers Act, the GP has

additional fiduciary obligations

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Most Favored Nation clauses (MFNs) Regulatory risk – implement a compliance policy and

appoint someone responsible for overseeing MFN compliance

Carve-outs Founders, manager and affiliates and employees By dollar amount invested By regulatory conditions Provide summary with identifying information omitted, to

protect privacy Take the bitter with the sweet – no cherry-picking!

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Side Letter Practice AmongInstitutional Investors

Other Provisions: Non-US Withholding Taxes and Tax Filings Listed Transactions and Prohibited Reportable

Transactions Notice Provisions (disparate informational concerns) Key Person Provisions (disparate informational

concerns) Indemnification Limitations (esp. gov’t and ERISA

plans) Jurisdictional issues (esp. gov’t plans) Confidentiality/Public Records Issues

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1940 Act Considerations

3(c)(1) Funds – Not more than 100 beneficial owners and not making or presently proposing to make a public offering (all accredited investors under Reg D is the norm) Non-integration for taxable and tax-exempt parallel

funds Look-through for owners of 10% or more of a 3(c)(1)

fund’s voting securities Look-through for entities “formed for the purpose of”

investing in a 3(c)(1) fund, 40% test General solicitation under new Rule 506(d) passed

under the JOBS Act permissible

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3(c)(7) Funds – up to 1999 record holders under 1934 Act– All investors must be “qualified purchasers”– QP status for individuals means $5 mm in

investments– For entities, $25 mm in investments– Same private placement requirement as 3(c)

(1) funds• All accredited investor offerings are the norm

68


Per the above, all 1940 Act exemptions require an exemption from the registration requirements of the 1933 Act

Rule 506 of Regulation DFederal Covered Security status under

NSMIABlue Sky “notice” filings and fees

– More aggressive state regulators

69

Investment Advisers Act of 1940 Considerations

Registration of the Manager– $100 mm AUM threshold for SEC registration

generally– $150 mm AUM threshold for private fund

advisers (exempt reporting adviser status)– State regulation

Performance Fees can only be charged to “Qualified Clients”

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Investment Advisers Act of 1940Considerations

Exemption for Advisers to Venture Capital Funds– 80% qualifying investments in equity securities issued by

qualifying portfolio company• Must be an operating company• Does not incur leverage for fund’s investment• Not a reporting or foreign traded company

– Limitation on fund-level leverage – 15%• Any such leverage is for a non-renewable term not longer than 120 days

– No redemptions by investors– Venture capital strategy representation– Private fund status (not registered as an investment company or

BDC)

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Investment Advisers Act of 1940 Considerations

With regulatory burdens come opportunities…– Attracting institutional money

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Commodity Exchange Act

Recent changes post-Dodd Frank eliminated Rule 4.13(a)(4), which was an exemption from CPO registration for pools offered to highly sophisticated investors

Rule 4.13(a)(3) exemption still available, but more limited, available to managers of private funds– Aggregate initial margin does not exceed 5%– Aggregate net notional exposure does not

exceed 100%

73

Commodity Exchange Act

4.13(a)(3) – sales only to Qualified Eligible Persons (QPs automatically qualify)

Many managers implementing quantitative strategies must register as CPOs and CTAs

74

Broker/Dealer Registration Requirements under the 1934 Act for PE Fund Managers

1934 Act Section 15(a)(1) prohibits any person from effecting transactions in, or inducing or attempting to induce the purchase or sale of, any security, unless that person is registered as a broker

Section 3(a)(4)(2) defines a broker as any person engaged in the business of effecting transactions in securities for the account of others

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Key Factors– Participant in key parts of transaction– Prior experience in securities transactions– Disciplinary issues– Handling of funds or securities– TRANSACTION-BASED COMPENSATION

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David W. Blass, Chief Counsel, Division of Trading and Markets,SEC, Speech on April 5, 2013 to the ABA Trading and Markets Subcommittee: A Few Observations on the Private Funds Space.

77


Very limited applicability of the issuer exemption in 1934 Act Rule 3a4-1.– Generally applicable to an operating company

personnel of which only occasionally engage in securities sales (no more than once every 12 months)

– Personnel must regularly perform substantial duties not related to sales of securities

– No transaction-based compensation

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Transaction-based compensation is important, but…if issuer personnel are regularly engaged in broker/dealer activity, broker/dealer registration may be triggered

Continuous capital raising activities Internal marketing personnel had better be

registered reps of a broker/dealer Private Placements: where is the broker/dealer?

79


Compliance Point: How certain fees are booked “commissions” and “sales charges” appearing on the

G/L need to be paid to a broker/dealer SEC specifically asks for accounting records in its

examinations Internal protocols to vet and document the status of

payees as broker/dealers should be implemented Payment to an unregistered broker/dealer blows the

Blue Sky exemption, opens the issuer to rescission liability

80


Other PE fund and manager activities Investment banking or brokerage activities for PE

fund portfolio companies Fees charged for sales or financings executed for

portfolio companies

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Chamberlain Hrdlicka Financial Services Practice Areas

Asset Management. Chamberlain Hrdlicka’s asset management attorneys’ experience spans multiple industries and asset classes. We routinely advise our clients on regulatory aspects of fund management and investment advisory operations. Our asset management team provides legal services to a wide range of clients in the asset management industry including registered and unregistered investment advisers, broker-dealers, corporate entities with multiple subsidiaries, publicly offered closed-end funds and mutual funds, private investment funds, and asset and wealth management firms, trust companies as well as other organizations with various fiduciary responsibilities. Our practice includes the formation and representation of investment companies, sponsors, advisers and directors, including SEC and FINRA regulatory compliance matters; fund formation, distribution and marketing; fund board and governance matters; compliance manuals and testing; and corporate transactions involving asset management businesses, including mergers, acquisitions and joint ventures.

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Chamberlain Hrdlicka Financial Services Practice Areas

Broker/Dealers The attorneys at Chamberlain Hrdlicka routinely counsel broker-dealer

clients on a broad range of legal issues:– Dodd-Frank and other financial institution regulatory reform – Regulatory, compliance and securities law matters relating to broker-dealers – Advise broker-dealers on the rules of the SEC, FINRA and other regulatory and self-

regulatory organizations – Registration requirements, including with regard to unregistered affiliates of registered

broker-dealers that wish to engage in securities-related activities

Our clients include a broad range of broker-dealers, as well as their non-broker-dealer subsidiaries and affiliates. We also serve small and mid-sized firms, and affiliates of insurance, commercial banking and other financial services companies. Chamberlain Hrdlicka also provides its broker-dealer clients with a full range of corporate, securities, M&A, tax and other advice in connection with their investment banking activities.

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Chamberlain HrdlickaFinancial Services Practice Areas

ERISA/Benefit Plan Investors

Review transactions with ERISA plan investors (401k plans, pension plans including Taft-Hartley plans, Keogh plans, IRAs, etc.) in pooled investment funds managed by private fund managers for compliance with applicable ERISA requirements including fiduciary responsibility, QPAM status, plan assets rule, prohibited transactions and exemptions therefrom. Advise on fund offering documents for provisions that address both ERISA plan investors and plan investors other than ERISA plan investors, such as US state and local government and foreign pension plans.

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Family OfficeThe attorneys at Chamberlain Hrdlicka understand the nature of representing wealthy individuals and their families. Our Family Office attorneys are very knowledgeable in not only establishing, but sustaining a Family Office for future generations. We can offer our clients an array of services which include, but are not limited to, investment management regulation and compliance, income, estate and gift tax planning, business succession planning, as well as legal aspects of management of closely-held businesses through a Family

Office.

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Financial ServicesChamberlain Hrdlicka’s financial services team is equipped to handle the ever-changing landscape of the financial sector and help our clients reach their business objectives. Our sophisticated financial services practice includes work in many areas of the industry, including mergers and acquisitions, asset management, capital market activities, product development and compliance, federal and state securities and domestic and offshore company formation. Chamberlain Hrdlicka routinely counsels their clients on matters regarding regulatory initiatives and legislation, as well as privacy law compliance.

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Hedge FundsChamberlain Hrdlicka understands sophisticated private managers need legal advisers with a level of knowledge and understanding of complex investment strategies that can support such sophistication. Our hedge fund attorneys have experience working with managers with many different fund styles, from single-strategy to multi-strategy hedge funds and funds of hedge funds. Chamberlain Hrdlicka assists clients throughout all stages of hedge fund development, providing counsel on the establishment and operation of hedge funds, including the preparation of fund formation documents and private placement memoranda. Chamberlain Hrdlicka’s hedge fund practice is dedicated to providing our clients with a partner to help assess and manage legal risk so they can focus on maximizing return.

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Investment AdvisorsChamberlain Hrdlicka attorneys advise clients in all aspects of their investment advisory business, including both retail and institutional advisory businesses. We counsel our investment adviser clients on the formation and operation of many types of alternative investment vehicles, including hedge funds, fund-of-funds, venture capital and private equity funds, private real assets funds and other public and private pooled investment vehicles. We also advise our clients on the complex federal and state regulatory, legal and compliance issues affecting investment advisers and their affiliates, including pay-to-play rules and lobbyist registration compliance matters.

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Investment ManagementChamberlain Hrdlicka’s investment management team provides a full range of legal, regulatory and advisory services including business formation, governance issues, transactions, registration, documentation and agreements, operational matters, and other corporate matters. We are able to advise our clients through each stage of investment maturation, assisting clients from fund formation and management to distribution arrangements with financial intermediaries. Our clients include mutual funds, closed-end funds, domestic and offshore private investment funds (including venture capital, private equity, and hedge funds), investment advisers, and broker-dealers.

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Private Equity FundsChamberlain Hrdlicka’s private equity attorneys can advise clients throughout the life cycle of a private equity transaction, from formation, to investments and ultimately to exit. We have expertise and experience in sophisticated transactions including leveraged buyouts, management buyouts, spin-offs, venture capital financings, going-private transactions, and recapitalizations and dispositions, as well as cross-border and international transactions.

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Private FundsChamberlain Hrdlicka’s Corporate, Securities & Finance practice group includes a team of attorneys who are well-versed in all legal and regulatory matters relevant to managing and investing in private funds. Our experience across many private fund structures, including private investment funds, hedge funds and private equity funds, enables us to assist clients in a wide scope of fund investment activities.

We help our clients move forward with private fund activities, employing a cross-disciplinary approach that incorporates the firm’s greater Corporate, Securities & Finance practice, along with other relevant practice areas including tax and tax planning. At any juncture in private fund operations, from fund formation to ongoing fund management, our team can navigate the legal, regulatory and compliance and governance matters, advancing for our clients the diverse objectives of both fund sponsors and investors.

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Wealth ManagementChamberlain Hrdlicka’s attorneys routinely counsel our financial services industry clients on their wealth management businesses. We understand wealth management represents the intersection of many disciplines, from investment advisory, broker/dealer, family office and tax and estate planning, to international tax and cross-border planning. Our strength in the tax and international tax areas also provides additional support to our clients with wealth management businesses.

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Jonathan W. DePriest

Jonathan DePriest maintains a sophisticated mergers and acquisitions practice, with an emphasis on investment management and financial services industries and asset management and wealth management firms, as well as private pooled investment vehicles (such as hedge funds and private equity funds). Mr. DePriest has successfully concluded over $2 billion in merger and acquisition transactions, drawing also upon the Firm’s strength in the tax field to provide sophisticated analysis and support in structuring transactions.

Mr. DePriest also counsels asset management clients in launching and managing private pooled investment vehicles, and serves as counsel to the adviser for regulated investment companies. Mr. DePriest has assisted in launching private investment funds that currently manage over $7 billion in assets. These funds have comprised diversified multi-asset class, multi-strategy funds of funds as well as single-strategy hedge funds, liquid alternatives funds, registered and regulated investment companies, and alternative investments such as timber, private energy and private equity.

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Chamberlain Hrdlicka WhiteWilliams & Aughtry

Atlanta

Denver

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[email protected]

Documents

Tax and Business Related Considerations for Private Equity and Other Investment Funds Jonathan W. DePriest Chamberlain, Hrdlicka, White, Williams & Aughtry