Klehr Harrison has developed a successful and experienced national investment fund formation practice that focuses on the unique challenges facing sponsors and investors engaged in the private pooled investment market. Our attorneys within the Fund Formation Practice Group devote substantial time to advising clients with respect to the formation of, and investment in, private pooled investment funds. Leveraging expertise from attorneys specializing in tax, intellectual property and real estate, Klehr Harrison offers comprehensive advice and extensive resources when addressing the unique strategies of each client. The Fund Formation Practice Group, located in Klehr Harrison's Philadelphia office, is by far the largest fund formation group in the region and enables Klehr Harrison to compete with national law firms at extremely competitive rate structures. Attorneys in the group frequently speak on the subject of fund formation, know where the market is for terms and conditions and are familiar with the “new technologies” in fund documents available at any given time.
Formation of Investment Funds
Klehr Harrison's Fund Formation Practice Group has advised clients in the formation of private funds ranging from $20 million to $2.5 billion in capital across diverse business sectors, including real estate, banking, healthcare, biotechnology, distressed companies, second lien lending, traditional private equity and mezzanine financing. Klehr Harrison attorneys advise fund sponsors on all aspects of fund administration, beginning with strategic planning and continuing through the liquidation of fund assets. Our experience affords our attorneys the insight necessary to address each stage of fund formation and administration. Whether it is preparing a private placement memorandum in a changing regulatory environment, negotiating partnership provisions with institutional investors (including addressing issues that are important to tax-exempt and foreign investors) or planning for a successful liquidation of entity assets, members of the Fund Formation Practice Group leverage their expertise and the firm’s network of attorneys to offer comprehensive solutions.
Fund Restructuring and Follow-On Fundraising
Attorneys in Klehr Harrison's Fund Formation Practice Group have gained extensive experience in restructuring commitments to private pooled funds at the request of the limited partners of those funds. While the firm represented the funds in these situations, attorneys in the Fund Formation Practice Group worked closely with counsel for limited partners to structure reductions in commitments and provisions providing for alternative sources of financing for the funds. In addition, attorneys in Klehr Harrison's Fund Formation Practice Group, in conjunction with other attorneys from the Corporate Practice Group and Real Estate and Finance Practice Group, have also acquired experience in raising additional capital for fund investments, including addressing tax, conflict and other issues that arise where funds require additional capital.
Capital Commitment Subscription Facilities
Klehr Harrison's Fund Formation Practice Group represents many of its clients in procuring capital commitment subscription facilities. In these representations, the funds benefit from our knowledge of their operations and issues that arise from our involvement in organizing the funds. We have represented funds in establishing facilities with most of the principal subscription facility lenders and have knowledge of their structures and how terms and conditions are evolving in response to changing market conditions.
Representation of Limited Partners
Experienced representation of fund sponsors creates unique insight for the representation of investors in private investment funds. Understanding the other side of the transaction gives attorneys in the Fund Formation Practice Group the knowledge necessary to negotiate investor-friendly terms and to provide advice with respect to investment strategies. Attorneys in the Fund Formation Practice Group assist clients ranging from large institutional investors (both taxable and tax-exempt) to individuals.
Klehr Harrison's Fund Formation Practice Group helps to address unique issues that arise when our fund clients make investments, such as structuring them to comply with ERISA exemptions or ensuring that distributions generated by the investments achieve a desired tax characterization. Our fund formation attorneys also assist fund sponsors to ensure that investments take into account specific requirements negotiated by a fund's partners, such as structuring alternative investment vehicles or co-investment by limited partners. During the term of a fund, sponsors often engage in joint ventures and other endeavors, and the attorneys in the Fund Formation Practice Group have experience in dealing with the nuances of joint venture and other investment arrangements and structures. Furthermore, as the regulatory environment governing private investment funds evolves, attorneys in the Fund Formation Practice Group advise clients on such issues and will continue to provide real-time advice.
Representation of Fund Executives
Klehr Harrison's Fund Formation Practice Group also advises fund sponsors and other executives on establishing relationships with other sponsors. Attorneys in the Fund Formation Practice Group have negotiated employment agreements for fund executives as well as partnership and operating agreements for fund general partners to reflect the deal among the various sponsors. Klehr Harrison's Fund Formation Practice Group represents sponsors and executives who join funds both when the fund is formed and in situations where the executive joins an established fund team.