The most challenging legal problems currently facing corporate finance clients are evolving regulations in the financial services industry and modernizing regulations internationally, says Peter Stewart, managing partner of Curtis Mallet-Prevost Colt & Mosle LLP’s Dubai office and a partner in the private equity, venture capital, mergers and acquisitions, and capital markets groups.
Eventually the availability of capital will move back toward more normal terms, and private equity groups will have both the money to spend and the need to exit existing portfolio companies, says Steve Quinlivan, a shareholder in Leonard Street and Deinard's corporate and business, M&A, and other practice areas.
A new wave of merger activity will start to gain traction in the second quarter of 2010, partly because of the tremendous amount of equity that has been raised by private equity funds and is sitting on the sidelines, says Gary I. Levenstein, chair of the corporate, securities and finance group at Ungaretti & Harris LLP.
The unavailability of debt financing and the relative unavailability of equity financing are the biggest challenges facing corporate finance clients these days, says Richard Waggoner, Gardere Wynne Sewell LLP's private equity team leader.
It is likely that private equity firms will need to start selling some of their portfolio companies in order to satisfy liquidity obligations to their investors, says Mark D. Williamson, chair of the economic recovery team and co-chair of the mergers and acquisitions team at Gray Plant Mooty.
By far the most difficult legal challenges facing corporate finance clients are potential changes in the law that are under consideration in Congress, one of the most important of which is the taxation of carried interest, says Stephen M.L. Cohen, chair of Choate Hall & Stewart LLP's private equity group.
As market conditions stabilize and firms form a clearer picture about valuation, there will be a lot of private equity mergers and acquisitions activity in the coming year or so, says Frank D. Chaiken, leader of Thompson Hine LLP's corporate transactions and securities group.
A wave of activity is already under way and will continue to build for clients undertaking mergers and acquisitions and private equity/venture capital deals involving investment management businesses, including hedge fund managers, says Jim Abbott, co-leader of Seward & Kissel LLP's business transactions group.
The ability of people to communicate and share information has expanded at a much more accelerated pace than the law governing the use of that information, says Steven K. Humke, a founding partner of the Ice Miller LLP private equity and venture services group.
As the economy continues to recover, private equity will get back into the buying game. They’ve sat on the sidelines for too long and have too much uninvested capital that they need to deploy, says Christopher Bellini, of counsel in Dorsey & Whitney LLP's corporate group.
As the economy rebounds, expect significant activity from portfolio companies of private equity firms, says Steven Khadavi, co-chair of the capital markets practice group at Dorsey & Whitney LLP.
Companies could soon face the need to streamline their businesses by shedding noncore operations, leading to a round of dispositions of subsidiaries and divisions of those companies, says Eileen T. Nugent, co-head of Skadden Arps Slate Meagher & Flom LLP's private equity group.
Private equity firms will likely return to access the public markets — both in terms of initial public offerings of equity securities and high yield debt, says Dominick DeChiara, chairman of Nixon Peabody LLP’s private equity practice.
We are already seeing distress-driven investment activity and this will continue for a while — both capital-raising for that purpose as well as the investments themselves, says James S. Seevers Jr., head of the private equity practice group at Hunton & Williams LLP.
There’s likely to be a fair amount of activity in energy, infrastructure and the financial institutions sectors, depending in part on what happens with government initiatives in those areas, says Margaret “Peggy” Andrews Davenport, co-chair of Debevoise & Plimpton LLP's private equity group.
Private equity firms face increased regulation including possibly having to register as an investment adviser. Current efforts to regulate the industry are unnecessary, says William Kirsch, chair of the global private equity practice at Paul Hastings Janofsky & Walker LLP.
As investment returns falter, interests between investors and fund managers become more disparate, investment allocations among asset classes become skewed, and management teams become unstable and dysfunctional, some investors are looking for ways to redefine or sever their relationships with fund managers, says Kimberly Mann, head of Pillsbury Winthrop Shaw Pittman LLP's private equity team.
The plaintiffs bar is always looking for new, solvent targets, and given the unprecedented growth of private equity over the last decade, "deep pocket" private equity funds are very much in the litigation crosshairs these days, says Randy Bodner, head of Ropes & Gray LLP's securities litigation group.
As the credit crisis has driven most private equity investors to the sidelines, many merger and acquisitions practices have sharpened their focus on strategic buyers, where deals can get done without the same degree of financing. But there remain opportunities for private equity investment in certain sectors, such as infrastructure investment, according to Frederick S. Green, co-chairman of the mergers and acquisitions group at Weil Gotshal & Manges LLP.
The Bankruptcy Code in its current form has not kept up with the developments in the financial industry. Its structure, while adequate for old economy manufacturing entities, is not well-suited to cases involving intellectual property-heavy or portfolio companies funded by the private equity and hedge fund industries, says John Monaghan of Holland & Knight in our series of chats with high-profile bankruptcy lawyers.
In light of the proposed e-discovery amendments to the Federal Rules of Civil Procedure, businesses need to set themselves up to efficiently respond to discovery and requests for information from their counsel by implementing and following document-control policies as part of normal business practices. The failure to do so will eventually consume vast amounts of employee time, say Steven Cvitanovic and Colin Murphy of Haight Brown & Bonesteel LLP.
While capital call facilities for true open-end funds have been relatively rare, the opportunity is ripe for new market entrants. A traditional facility would not be feasible for an open-end fund, but a few structural tweaks should do the trick, say attorneys with Mayer Brown LLP.
Because Latin American countries differ substantially from one another, there is no effective one-size-fits-all approach to anti-corruption compliance in the region. That said, companies doing business in the region should be aware of a number of recurring compliance concerns that may lead to an increased risk of violating the FCPA or other applicable anti-bribery laws, say attorneys with Debevoise & Plimpton LLP.
Even if the European economic recovery remains constrained, the global real asset rotation and navigation of the commercial real estate debt gap should continue to propel real estate investment up the risk curve in 2014. The growing participation of larger institutional players also signals larger deals in core markets, says Eric Rosedale, co-chairman of Dentons real estate group in Europe.
A new law in Mongolia dramatically alters the investment landscape in the country, eliminating the broad restrictions on private foreign investment in the minerals, communication and financial sectors that previously existed, removing the parliament from the approval process, and ending the distinction between foreign and domestic investors, says Stewart Diana of DLA Piper LLP.
The U.S. Securities and Exchange Commission recently announced sanctions against six investment advisory firms that, taken as a whole, highlight two continued areas of focus for the SEC: compliance program deficiencies and violations of the “custody rule," say Hoyt Stastney and Peter Kaiser of Quarles & Brady LLP.
While the Delaware Chancery Court’s approach to Orchard Enterprises Inc. was limited to the facts of the case, there are at least two other options that can be considered in valuing preferred stock. In particular, the option pricing methodology has become a well-recognized approach to allocate enterprise value among security holders, say Louisa Galbo and Jaime d'Almeida of Duff & Phelps Corp.
Picture this: A seller of goods is losing tens of millions of dollars per year on a requirements contract containing price caps that the parties have operated under for years. Given the Uniform Commercial Code and relevant case law, it would be natural — and completely logical — to accept the cogent authority establishing that rising costs are generally insufficient to invalidate a contract. I am betting that, in this case, the law will trick you, says Andrew Jarzyna of Ulmer & Berne LLP.
The principles behind the passive activity loss limitations rules under Section 469 of the Internal Revenue Code and the net investment income Medicare tax under Section 1411 are similar. Congress could have merely made the existing rules apply to the new tax, but instead they added more complication and possible holes, say Chester Grudzinski and Jacob Birnbaum of Kelly Hart & Hallman LLP.
Along with significant growth in medical practices geared toward chronic pain management over the last several years comes increased illegal conduct and the development of pill mills. Investors looking toward a portfolio that includes a practice with its own lab should take certain steps to minimize their risk of exposure to improper conduct, say attorneys with McGuireWoods LLP.