Corporate Governance

Private Equity Funds

Private equity fund investors and regulators are more interested than ever before in corporate governance issues. Arnold & Porter provides corporate governance advice to our private equity fund sponsor clients on many levels, including: (i) best practices for fund governance (e.g., in disclosure, valuation, risk management, operations, compliance, and conflicts practices); (ii) preparation of appropriate compliance procedures and policies; and (iii) the potential use of limited partner advisory committees and outside directors. We also regularly advise fund sponsors and their principals in connection with their downstream investment activities, including in their capacity as members of the boards of directors of their portfolio companies. Our involvement at the portfolio company level often commences at the investment stage, by developing and implementing appropriate corporate governance structures and advising individual director nominees as to their rights, duties, and obligations under applicable law, and continues through exit, by assisting fund managers in navigating potential conflicts between their interests as investors and the fiduciary obligations of their director nominees to the portfolio company and its other stakeholders. We also defend private equity funds and their employees in governance related litigation, including investor suits and actions brought by portfolio company creditors.

Representative Experience

  • Advised a multi-billion dollar private equity fund and certain of its employees who served as directors of a financially distressed portfolio company concerning corporate governance issues and best practices when considering sale and restructuring scenarios.
  • Defended a private equity fund and individual directors in breach of fiduciary duty litigation arising from a failed leveraged buyout.
  • Advised a private equity fund manager in connection with claims by certain investors that the fund manager breached its duties to those investors. Our attorneys led negotiations that resulted in the investors' claims being dropped without litigation.
  • Defended a private equity fund and individual directors against breach of duty claims arising from distressed sale of a portfolio company.
  • Advised a private equity fund and portfolio company directors concerning breach of duty allegations made by subordinated noteholders; negotiated a restructuring that preserved substantial value for the private equity fund; and released all breach of duty claims without litigation.

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