Ms Sarah Paterson New Academic Building 6.06 and Dr Simon Witney N/A

Sarah Paterson and Simon Witney will co-teach this course.

This course is available on the LLM (extended part-time), LLM (full-time) and University of Pennsylvania Law School LLM Visiting Students. This course is available with permission as an outside option to students on other programmes where regulations permit.

This course will equip students with a detailed understanding of the legal structures and issues arising in international private equity and venture capital.  It is founded on deep academic analysis of pertinent theoretical and legal issues complemented by insights from relevant practitioners.  It will have a pan-EU focus, but with comparative global perspectives. 

Class 1: Introduction to private equity and venture capital 

This introductory session will include a critical discussion of the academic research suggesting that private equity outperforms other asset classes.

Optional practitioner talk: “Why we invest in private equity: a leading UK investor explains the attraction of the asset class"

Class 2: Fund structures: the limited partnership and other international structures 

This class looks at the structures adopted, and the reasons why, with particular emphasis on the legal, tax and regulatory characteristics of limited partnerships.

Class 3: Management vehicles and the UK LLP 

This class will look at the objectives in structuring the management entity for the fund, with a particular emphasis on the legal and tax characteristics of LLPs, including the UK LLP Act and recent case law.

Class 4: Private equity fund (and manager) regulation 

This session looks at UK and EU regulatory initiatives, and critically evaluates the provisions of the Alternative Investment Fund Managers Directive which affect private equity funds

Class 5: Venture capital investments 

Starting from a theoretical perspective, we will analyse the terms of a typical venture capital investment into a portfolio company by reference to example documents.  We will also examine various aspects of contract and company law which have particular relevance to VC structures

Class 6: The VC deal: feedback from a practitioner 

This week the students will discuss the key points arising from a venture capital investment case study with a leading VC lawyer.  We will focus on key points which have a legal as well as a commercial aspect, and connect these to the theoretical discussions in Class 5.

Class 7: The leveraged buyout: corporate governance issues 

This class will examine the structure of a buyout and how it differs from a VC investment.  We will focus on pertinent company law rules and academic corporate governance theory.

Class 8: Financing

This class will look at the leveraged finance model, advantages of leverage, the LMA Leveraged Loan Agreement, High Yield Bonds, the Inter-creditor Agreement and “covenant-lite” and incurrence covenants

Optional lunchtime talk: “The anatomy of a buyout deal: a leading private equity lawyer talks about a recent high profile deal.”

Class 9: Distress

Discussions on the implications of distress for the PE firm, valuation, the new money decision, the role of the inter-creditor agreement and the PE firm as the loan-to-own investor

Optional practitioner talk: “Case study of a recent buyout deal: the general counsel from a leading private equity firm explains key issues arising on a recent transaction”

Class 10: This week we will analyse a suite of leveraged loan deal documentation for a typical private equity buyout.  Students will be provided with a fact pattern and asked to apply the theory that they have studied in weeks 8 and 9 to the deal documentation.

20 hours of seminars in the LT. 2 hours of seminars in the ST.

The course will consist of 10 x 2 hour seminars in LT, together with a revision class in ST.  There will be a reading week in Week 6.  There will also be optional talks by practitioners which students may choose to attend, but which will not be examined.

A formative essay will be due in Week 7 and detailed feedback will be provided shortly after.  The essay will have a word limit of 1,500 and will provide invaluable preparation for the summative assessment.

Example core readings:

Ascimacopoulous, K. and Bickle, J. (eds), European Debt Restructuring Handbook: Leading Case Studies from the Post-Lehman Cycle (Globe Law and Business, 2013)

Blake J., and Robinson, L., “Private equity fund structures – the limited partnership”, in Hale, C. (ed.), Private Equity: A Transactional Analysis, 3rd edition (Globe Law and Business, 2015)

Cooke, D.J., Private Equity: Law and Practice, 5th edition (Sweet & Maxwell, 2015), selected chapters

Gullifer, L. and Payne J., Corporate Finance Law: Principles and Policy (Hart Publishing, 2015), 768-790

Jensen, M.C. & Meckling, W.H., “Theory of the firm: Managerial behavior, agency costs and ownership structure”, 1976, Journal of Financial Economics, 3(4), pp.305–360.

Howard, C. and B Hedger, B., Restructuring Law and Practice (LexisNexis, 2014)

Morse, G., Partnership and LLP law, 8th edition, (Oxford University Press, 2015), selected chapters

Paterson and Zakrzewski (eds) McKnight, Paterson and Zakrzewski on the Law of International Finance (forthcoming OUP, 2016)

Talmor, E. & Vasvari, F., International Private Equity (John Wiley & Sons, 2011), selected chapters

Witney, S., Private Equity Finance and Buyouts, in Dunne, P., (ed). Company Acquisitions Handbook  (Tottel Publishing Ltd, 2007), p. 651.

Additional weekly readings will be provided to the students at the beginning of the course.

Take home exam (100%) in the ST.

Students will be given a period of time in which to complete and return a take home exam, with penalties for late submission.  Students will be asked to complete 2 questions from a possible 6 (with a requirement to choose one question from Part 1 and one question from Part 2) and each answer will be limited to 1,500 words, with penalties for exceeding the word limits.  For more information regarding penalties, please refer to the LLM Handbook.