A Practical Guide to the Mechanics of a Secondary Transaction and Attendant Considerations

In light of the consistent growth of the secondary market, MJ Hudson recently published practical guidance (Guide) for market participants. The Guide focuses on selling interests in PE funds and provides a high-level outline of ways sellers can prepare for the auction process, steps involved in the auction process and issues the parties should be aware of when carrying out secondary transactions. This article sets out the key points from the Guide, including checklists for sellers preparing for sale, a step-by-step guide to the auction process and a breakdown of key provisions in the primary documents in the sale of interests in PE funds. For coverage of additional MJ Hudson reports relating to the PE funds, see “Trends in PE Fund Governance Terms and Implementation of Key Investor Protections” (Feb. 4, 2020); and “Recent Trends in Key PE Terms Impacting Alignment of LP and Manager Interests” (Nov. 19, 2019). To further explore recent trends in the secondary market, on Thursday, March 12, 2020, at 11:00 a.m. EDT, the Private Equity Law Report will host a complimentary webinar discussing secondary transactions led by general partners (GPs). The webinar, entitled “The Evolution and Future of GP‑Led Restructurings,” will be moderated by Rorie A. Norton, Editor of the Private Equity Law Report, and will feature Davis Polk partner Leor Landa and Kirkland & Ellis partner Ted Cardos. To register for the webinar, click here.

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