Ms Sarah Paterson New Academic Building 6.19 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 not available as an outside option.

Students should note that private equity is a specialist asset class,and the basics of debt and equity are not covered in LL4CQ. The course is, therefore, recommended for students who are taking other, relevant corporate law and financial law courses, or who have relevant experience.

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.It will have a pan-EUfocus, but with comparative global perspectives. 

Session 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.

Session 2: Fund structures: the limited partnership and other international structures.

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

Session 3:  Management vehicles and the UK LLP 

This session 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.

Session 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.

Session 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.

Session 6: The VC deal

In this sessionthe students will discuss the key points arising from a venture capital investment case study.We will focus on key points which have a legal as well as a commercial aspect, and connect these to the theoretical discussions in Session 5.

Session 7:  The leveraged buyout: corporate governance issues

This session 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.

Session 8:  Financing

This session 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 incurrance covenants.

Session 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.

Session10:

In this session 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 sessions 8 and 9 to the deal documentation.

 Students will receive 24-26 hours of contact time

Students will have the option of producing a formative essay of 2000 words to be delivered one month from the end of the module’s teaching session by email.

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.
• (http://etheses.lse.ac.uk/3557/)

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

Assessment path 1
Essay (100%, 8000 words).

Assessment path 2
Take-home assessment (100%).