The Evolution and Future of GP‑Led Restructurings: Key Considerations When Negotiating Fees, Expenses and RWI (Part Two of Two)

The GP‑led secondary market has grown rapidly over the last few years, evolving and expanding along the way. That growth has created opportunities, new technology and unique challenges for sponsors, investors and legal practitioners in the space. In addition, as GP‑led restructurings are increasingly being pursued globally, each jurisdiction is developing its own trends and issues with closing the transactions. The tensions and driving forces that sparked the growth of GP‑led restructurings and how they are likely to influence future developments were explored in a recent Private Equity Law Report webinar moderated by Rorie A. Norton, Editor of the Private Equity Law Report, and featuring Leor Landa, partner at Davis Polk, and Ted Cardos, partner at Kirkland & Ellis. This second article in a two-part series summarizes key takeaways from the program, including unique issues with allocating fees and expenses; the increasing use of representation and warranty insurance; and differences in the transactions between the U.S. and Europe. The first article explored trends in ways the transactions are being structured and valuable solutions to ever-present conflicts of interest in the transactions. For additional commentary from Landa, see “PE Expectations for 2020: Fee Arrangements, Fund Terms and the Secondary Market (Part Two of Two)” (Jan. 14, 2020); and “An Insider’s Perspective on the Evolution of the PE Secondary Market” (May 14, 2019).

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