Private Equity and Real Estate Fund Formation

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Overview

Our Clients

Katten attorneys represent sponsors of private equity funds and real estate funds across a broad array of investment strategies. Katten represents well-established sponsors as well as those seeking to raise a first-time fund. We also advise institutional investors, such as public pension plans, corporate pension plans, fund-of-funds, family offices, high net-worth individuals, private foundations, and insurance companies in their fund investments.

Our Services

Our multidisciplinary team handles all aspects of a private equity or real estate fund—from initial formation through final closing, regulatory compliance, day-to-day operations, and liquidation and winding-up.

At the outset of forming a new fund, we work with the client to develop an appropriate structure for the fund and its sponsor. This includes developing tax-efficient structures for potential fund investors, including taxable, tax-exempt, foreign and governmental investors. We handle the preparation and negotiation of fund documentation, including partnership agreements, side letters and subscription documents. In addition, our attorneys assist clients with developing and reviewing marketing materials, including "flip-books" and private placement memoranda.

We provide guidance in structuring the general partner and management company and prepare documentation relating to the governance of such entities and sharing of the carried interest and management fee. We also work closely with Katten's Trusts and Estates group to provide sophisticated, cutting-edge estate planning specifically tailored to the particular issues faced by fund managers.

We guide private equity and real estate fund sponsors through all aspects of regulatory registration and compliance, including investment adviser registration; Securities and Exchange Commission (SEC) audits, inspections, and enforcement investigations; commodity trading advisor (CTA) and commodity pool operator (CPO) registrations or exemptions; and compliance with broker-dealer rules and registration requirements, including FINRA marketing rules. We also help sponsors implement and maintain compliance programs that satisfy regulatory standards and reflect industry best practices under the Investment Advisers Act of 1940 and other applicable regulatory regimes. Our team of regulatory attorneys keeps abreast of current trends and areas of emphasis in compliance inspections and enforcement, and provides our clients with timely and practical counsel on successfully navigating regulatory examinations and inquiries. For US clients with international presence who are looking to obtain a pan-EU marketing passport, we have significant experience with the European Securities and Markets Authority (ESMA) and the latest Alternative Investment Fund Managers Directive (AIFMD) regulations—leveraging assistance from our London team. When structuring funds, our attorneys counsel sponsors regarding compliance with ERISA rules, in particular venture capital operating company (VCOC) and real estate operating company (REOC) matters. We also have experience with qualified professional asset manager (QPAM) matters in the context of a "plan assets" fund.

Our team has substantial experience establishing first-time funds and addressing the numerous issues related to forming a new investment manager. We combine the vast resources of a large law firm with the cost-effectiveness and agility of a smaller firm. Employing sensible and straightforward strategies, our attorneys often suggest alternative approaches for sponsors in achieving their first closing in an efficient and timely manner.

Supported by the firm's nationally recognized Real Estate group, our team is also adept at forming and counseling real estate funds. We've counseled sponsors focused on the acquisition of undeveloped land, agricultural land and properties, hospitality properties, multi-family properties and general opportunistic strategies. To accommodate tax-exempt, foreign and governmental investors, we have implemented private real estate investment trusts into the structure of these real estate funds.

In the course of our representation of investors in private equity and real estate funds, we regularly review and negotiate the terms of such funds. By representing diverse investors in a wide variety of fund investments, we understand the market and fund structures and use such experience to provide effective counsel to our investor clients.

Katten attorneys also provide clients with ancillary support. If litigation matters arise, we leverage the extensive experience of our Financial Services Litigation attorneys who have successfully litigated complex, high-stakes disputes in federal and state courts across the country, and before administrative law judges, business conduct committees and arbitration panels. Our attorneys represent clients in SEC, Commodity Futures Trading Commission (CFTC) and Department of Justice (DOJ) investigations and enforcement actions; self-regulatory organization (SRO) disputes; administrative proceedings; and private civil litigation.

In addition, we represent buyers, sellers and intermediaries in the growing secondary market in a variety of transactions, including single fund interests and portfolios of interests involving multiple fund managers. We also have experience representing clients in stapled transactions and secondary direct transactions.

Because we advise both sponsors and investors, our knowledge of the current market terms and conditions for private equity and real estate funds is extensive. In representing fund sponsors, we apply this knowledge and experience to form funds in a cost-effective and timely manner. We believe our private equity and real estate fund experience positions us well to respond quickly with practical solutions for issues affecting sponsors and investors.

Firm News

Recognition

Corporate/M&A & Private Equity (Illinois), 2013–2016
Corporate Law (National), 2011–2017
Corporate Law (Chicago), 2011–2017
Private Funds/Hedge Funds Law (Chicago), 2015–2017
Private Funds/Hedge Funds Law (National), 2015–2017
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Recognition

Corporate/M&A & Private Equity (Illinois), 2013–2016
Corporate Law (National), 2011–2017
Corporate Law (Chicago), 2011–2017
Private Funds/Hedge Funds Law (Chicago), 2015–2017
Private Funds/Hedge Funds Law (National), 2015–2017
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