Fund Formation
SADIS&GOLDBERGLLP
PreparedFor:Mark
AbeshouseandAlanMason
ABOUT SADIS
Sadis&GoldbergLLPisaninternationallyrecognizedlaw firm.Drawingontheexperienceanddepthof ourlawyersinthesedistinctareas,weleverageeach lawyer’sindustry-specificknowledgetohelpourclients succeed.Thiscollaborativeapproachbringscollective insighttothetablethatcontributestosensible,efficient resolutions,andallowingustoremainattentivetothecost andtimesensitivitiesthatmaybeinvolved.Sadisclients includedomesticandinternationalentities,financial institutions,familyoffices,venturecapitalfunds,hedge funds,privateequityfunds,buyoutfunds,commodity pools,specialpurposevehiclesandnumerousbusinesses operatinginvariousindustriesaroundtheworld.
INDUSTRY INVOLVEMENT
SadisAnnualPrivateFundsForum–Industryleaders fromlawfirms,accountingfirms,thirdpartyadministrators, directorsandconsultantsfocusedontheprivatefund industrygathertogetherforseveraldays fromacrossthe globetoshareideasanddiscussrecentdevelopments facingthefinancialservicesindustry.
SadisBusinessBreakfast–Bringstogetherinvestors, founders,accountants,analysts,capitalproviders,and otherbusinessleaderstodiscusstrendingtopicsand network.
IndependentSponsors–Sadishostsnetworkingevents forcapitalprovidersandindependentsponsors.
Sadis Family Office Lunches – Executives from family offices networking and sharing ideas on market trends acrossvariousindustries.
FOCUSED SOPHISTICATED REPRESENTATION
Sadis maintains a diverse, business-oriented practice focused on private investment funds, asset and wealth managers, family offices, litigation, corporate, mergers & acquisitions, real estate, regulatory and compliance, tax and ERISA.
“No law firm is better in the hedge fund space. Sadis doesn’t just know the legal framework; they are on the cutting edge of defining it.”
– JOHN STERLING FOUNDER, STERLING FUND MANAGERS
Our Team
Sadis&Goldberg’steamisexceptionally experiencedinventurefundformation andmergersandacquisitions.Ourfirm's partnershavedecadesofexperience,both atSadis&Goldberg,aswellasatlarger internationallawfirmsandtheU.S. Securities&ExchangeCommission.
OUR TEAM
Paul Marino PARTNER
212.573.8158
pmarino@sadis.com
Paul Marino is a partner in the Financial Services and Corporate groups. Paul focuses his practice in matters concerning financial services, corporate law and corporate finance. Paul provides counsel in the areas of private equity funds and mergers and acquisitions for private equity firms and public and private companies, and private equity fund and hedge fund formation.
Paul works on a variety of M&A transactions, including leveraged acquisitions, divestitures of business divisions, going-private transactions, and other strategic acquisitions and dispositions in the following industries: manufacturing, telecommunications, consumer products, hospitality, healthcare, and technology, among others. His practice also includes joint ventures and general company representation matters.
Paul has represented national and multinational corporations, ranging from telecoms to tech companies, as well as real estate syndication and financial investors and investment advisors. He has also negotiated and structured a number of U.S. domestic and cross-border mergers and acquisitions, and joint ventures.
Paulprovides counselintheareas ofprivateequity fundsandmergers andacquisitions forprivateequity firmsandpublicand privatecompanies, andprivateequity fundandhedgefund formation.
OUR TEAM
David Fitzgerald PARTNER
212.573.8428
dfiztgerald@sadis.com
David Fitzgerald’s practice focuses on investment funds, securities, joint ventures, regulatory compliance and investment advisers. He regularly structures and organizes hedge funds, private equity funds, funds of funds, separately managed accounts and hybrid funds. Additionally, he advises private fund managers on structure, compensation, employment and investor issues, and other matters relating to management companies.
Drawing on his 16 years of experience as an institutional Chief Compliance Officer and General Counsel, David provides ongoing advice to investment advisers on securities law issues, including SEC filings. His practice also involves counseling clients in SEC regulatory matters, including compliance issues related to registered advisers.
David is a Partner in the Firm’s Financial Services and Corporate Groups.
OUR TEAM
Yehuda M. Braunstein
PARTNER
212.947.3796
ybraunstein@sadis.com
Yehuda M. Braunstein heads up the Family Office practice and is also a member of the firm’s Financial Services and Corporate Groups. Mr. Braunstein counsels family office clients in connection with all aspects of their operations, including formation issues, governance and compensation issues, transactional and day to day matters as well as compliance issues.
Mr. Braunstein’s practice also focuses on investment funds, securities, joint ventures, regulatory compliance and investment advisers. He regularly structures and organizes hedge funds, private equity funds (including real estate, distressed and lending funds), funds of funds, separately managed accounts and hybrid funds. Additionally, he advises private fund managers on structure, compensation, employment and investor issues, and other matters relating to management companies. Mr. Braunstein also structures and negotiates seed investments and operating agreements. He provides ongoing advice to investment advisers on securities law issues, including SEC filings. His practice also involves counseling clients in SEC regulatory matters, including compliance issues related to registered advisers, as well as conducting mock audits.
Yehuda regularly structures and organizes hedge funds, private equity funds (including real estate, distressed and lending funds), funds of funds, separately managed accounts and hybrid funds.
OUR TEAM
Paul D. Fasciano PARTNER
212.573.8025
pfasciano@sadis.com
Paul D. Fasciano is a partner in the firm’s Financial Services and Corporate groups. Paul began his career as a general corporate attorney, and now focuses his practice on representing private fund managers, both in the formation phase and also in ongoing corporate and transactional matters, including mergers and acquisitions, activist investor representation, securities law compliance and derivatives.
Paul regularly counsels clients on structuring and forming U.S. and non-U.S. private investment funds, including hedge funds, private equity funds and custom “hybrid” funds incorporating features of both. Funds advised by Paul cover a wide variety of strategies and asset classes, with varying liquidity characteristics, including more typical asset classes such as publicly traded equities, as well as less typical asset classes such as loans, consumer receivables and renewable energy credits. Paul also has extensive experience in drafting and negotiating agreements memorializing the relationship between the principals of a fund.
Paul has advised participants in a variety of public and private merger and acquisition transactions in diverse industries and has brought this practice to focus on transactions involving investment advisers, broker-dealers and other players in the financial services industry.
OUR TEAM
Yelena Maltser PARTNER
212.573.8429
ymaltser@sadis.com
Yelena Maltser practices in the firm’s Financial Services and Corporate groups. Yelena regularly counsels clients on structuring and forming U.S. and non-U.S. private investment vehicles (including, without limitation, hedge funds, private equity funds, hybrid funds, funds with non-traditional asset classes, real estate funds, venture capital funds, funds-offunds, commodity pools, as well as managed accounts). Yelena also advises clients on structuring the management entities to such funds. She regularly prepares offering and organizational documents for investment funds; negotiates side letter agreements, seed capital agreements, joint venture agreements and compensation arrangements; reviews marketing materials; and provides ongoing advice to existing investment vehicles and management entities. In addition, Yelena counsels investment managers on registration and ongoing regulatory compliance issues.
Prior to joining Sadis & Goldberg, Yelena was associated with two other New York City-based law firms, where she was involved in general corporate work.
Yelena counsels investment managers on registration and ongoing regulatory compliance issues.
OUR TEAM
Erika L. Winkler PARTNER
212.573.8022
ewinkler@sadis.com
Erika L. Winkler is a partner in the firm’s Financial Services and Corporate groups. Erika’s practice focuses on the structuring and formation, capital raising and regulatory compliance of U.S. and non-U.S. private investment vehicles, including, without limitation, hedge funds, private equity funds, hybrid funds, funds with non-traditional asset classes, real estate funds, venture capital funds, special purpose vehicles, funds-of-funds, commodity pools, as well as managed accounts. She also regularly advises management companies and fund managers on a wide array of matters, including compensation structures, restructurings and reorganizations, joint ventures, side letters and seed capital transactions, and employment and investor issues, and negotiates and prepares related agreements and documentation.
Erika’s practice focuses on the structuring and formation, capital raising and regulatory compliance of U.S. and non-U.S. private investment vehicles.
OUR TEAM
Seth Lebowitz PARTNER
212.573.8152
slebowitz@sadis.com
Seth Lebowitz is a partner in the firm’s Tax group. Seth advises clients on the tax-efficient planning and execution of a broad range of transactions, with a particular focus on the formation, operation and investing activities of private equity and hedge funds. Seth has experience with:
• Domestic and international tax issues relating to fund structuring
• Joint ventures and partnerships
• Corporate and real estate investing
• Lending
• Securities trading
• Distressed investing
• Financial products.
Seth advises clients on the tax-efficient planning and execution of a broad range of transactions, with a particular focus on the formation, operation and investing activities of private equity and hedge funds.
OUR TEAM
Jaywon Choi ASSOCIATE
212.573.8424 jchoi@sadis.com
JaywonChoiisanassociateinSadis’FinancialServicesandCorporategroups,focusingonfund formation,corporatetransactions,andregulatorycomplianceforinvestmentfunds.
JaywonisfluentinKorean.
OUR TEAM
Jacob Shiffer ASSOCIATE
212.573.8027
shiffer@sadis.com
JacobShifferisanassociateinthefirm’sFinancialServicesandCorporategroups.Jacob concentrateshispracticesonprivatefundformation,mergersandacquisitions,andgeneral corporatematters.
PriortojoiningSadis,JacobservedintheUnitedStatesAirForceforeightyears,wherehe workedasanAnalyst.
ABOUT SADIS
Focused on you, sophisticated representation.
Sadis maintains a diverse, business-oriented practice that draws on the experience of our attorneys and leverages our industry-specific knowledge to help our clients succeed.
This collaborative approach fosters a collective insight that contributes to sensible, efficient service that allows us to remain focused on you.
INVESTMENT FUNDS
The Sadis Investment Funds practice has represented private funds clients for almost 30 years, playing aprominent role in the development of the private funds industry and earning usaunique leadership role in the sector. Working closely with lawyers in the Firm’s other practice areas, our team provides comprehensive advice to many of the world’s best-known institutional alternative assetmanagers, aswellassmallerfirst-timefundsandindependentboutiques.
Our clients include the full spectrum of investment funds, including private equity, hedge, real estate, venture capital, registered mutual (both open-end and closed-end) and UCITS funds, sponsored by some of the highest-profile global fund managers. We work extensively either with or opposite each major category of investor in private funds, including corporate, public and private pension plan, private family, foundation and endowment, fund of funds, sovereign wealth fundandquasi-governmentalorganizationinvestors.
CORPORATE
Sadis & Goldberg’s Corporate group represents business entities in all stages of growth, from small startups and emerging businesses to large and long-established business entities.
Our attorneys act as ongoing transactional counselors and resolve complex issues in the United States and internationally, in areas such as mergers and acquisitions; activist investing; derivatives; private equity and venture capital; securities regulation; PIPE transactions; banking and finance; and capital markets. The broad nature of the services we render reflects the wide scope of our clients’ needs and the many and varied industries in which they operate. Attorney teams drawn from the firm’s related legal areas collaborate to provide the experience needed for each of these transactions, including counsel on issues related to tax, real estate, labor, ERISA, litigation and intellectual property, as the client’s circumstances require.
MERGERS & ACQUISITIONS
Yearafteryear,ourMergers&AcquisitionspracticegroupcontinuestosetthepaceforleadingedgeM&Atransactions.Weconsistentlycollaboratewithpublicandprivatecompanies,financial sponsors,independentsponsors,boardsofdirectors,andfinancialadvisors.
Ourapproachisteam-oriented.Clientstrustusnotonlytoadviseonspecifictransactionsbutalso toprovidecounselandstrategicinsightstoachieveoptimalbusinessoutcomes.Weaimtomanage allaspectsofadeal,goingbeyondmerelegaltactics.Thiscommitmentismaintainedinevery transactionaswefocusonyourgoals,seekingtounderstandyourbusinessanddeliverthe greatestpossiblevalue.
Thecomprehensivenatureofourservicesreflectsthebroadscopeofourclients’needsacross diverseindustries.OurM&Aplatformcomprisesamulti-disciplinaryteamofattorneysdrawnfrom thefirm’srelatedlegalareas.Thiscollaborativeapproachensuresthenecessaryexpertiseforeach transaction,incorporatingdistinguishedprofessionalsintax,finance,regulation,andexecutive compensation.Ourteamprovidesseamless,integratedservice.
Sadis’sMergers&Acquisitionsgrouprepresentsbusinessentitiesatallstagesofgrowth,ranging fromsmallstartupsandemergingbusinessestolargeandlong-establishedentities.Ourattorneys serveasongoingtransactionalcounselors,addressingcomplexissuesbothintheUnitedStates andinternationally.Wespecializeinareassuchasmergersandacquisitions,activistinvesting, derivatives,privateequityandventurecapital,securitiesregulation,SPACandPIPEtransactions, bankingandfinance,andcapitalmarkets.
HEDGEFUNDS
The Financial Services Group at Sadis provides legal advice to both domestic and offshore private investment funds in the alternative investment space. We provide counsel on the structure and formation of new funds, as well as the reorganization and restructuring of existing funds. We structure and service a wide variety of funds, such as long/short equity funds, global macro funds, emerging market funds, risk arbitrage funds, convertible arbitrage funds, high yield bond funds, distressed debt funds, bank debt funds, sector-specific funds (e.g. technology, Internet, health care, biotechnology), collectible funds (e.g. car, art, watch), crypto-currency funds, cannabis funds, fund of funds, multi-manager funds and fund platforms. We provide customized drafting of confidential private placement memoranda, limited partnership agreements, operating agreements, subscription documents and other related fund documents.
We also draft and negotiate agreements documenting the relationship with fund managers, principals and employees, subadvisors, consultants and fund counterparties. Sadis currently represents hundreds of private investment funds with managers throughout the world. Our client base is comprised of clients of all sizes, backgrounds and investment sectors and our client base represents a significant percentage of the private fund industry’s market share, providing the Firm with an unusual awareness of current market behaviors, favored commercial terms and other industry trends. This unique access to current market information allows our team to advise our clients with both experienced legal counsel and timely business intelligence. By virtue of representing several hundred alternative investment vehicles with investment managers domiciled
throughout the world, our market share gives us a unique perspective on the global investment funds industry.
Additionally, as a result of our unique global footprint, we enjoy very strong relationships with leading legal counsel and other professionals in international centers for onshore and offshore finance, such as the Cayman Islands, Bermuda, the British Virgin Islands, Luxembourg, Ireland, Switzerland, Malta, Jersey, Guernsey, Mauritius, Hong Kong and the United Kingdom. In addition, we maintain a specialized cross-border funds practice targeting non-US managers seeking to offer securities and launch products in the United States, including clients in Ireland, the UK, the Netherlands, Canada, China, Singapore, France, Luxembourg, Germany and Switzerland.
Our client base represents a significant percentage of the private fund industry’s market share, providing the Firm with an unusual awareness of current market behaviors, favored commercial terms and other industry trends.
PRIVATE EQUITY
OurPrivateEquitygroupisexperiencedinallaspectsofstructuringandbringingtomarketawide varietyofprivateequityandventurecapitalfunds,includingmanyuniqueandinnovative“hybrid” funds.Weroutinelyrepresentfundsandmanagersoperatinginabroadarrayofassetclassesand industries,including,withoutlimitation,realstate,specialtyfinance,healthcare,media,software, insurance,biotechnology,cannabis,communications,oilandgas,gaming,leisure,entertainment, renewableenergycredits,fintech,alternativefinanceandwaterrights.Wealsohaveadiverse internationalexperience,andhaveformedprivateequityfundsand/oradvisedclientsinconnection withprivateequityinvestmentsinAustralia,Austria,Bermuda,BritishVirginIslands,Canada, CaymanIslands,CentralAmerica,China,Greece,Guernsey,India,Ireland,IsleofMan,Israel,Japan, Jersey,Luxembourg,Mauritius,Switzerland,SingaporeandUkraine.
REGULATORY & COMPLIANCE
WEADVISEINVESTMENTADVISERS,FUNDSANDBROKERDEALERSONTHE U.S. REGULATORYASPECTSOFTHEIRBUSINESS,INCLUDINGTHEFOLLOWING:
o Securities Exchange Act of 1934. We advise clients on broker-dealer laws applicable to their selling activities and regularly negotiate private placement and distribution agreements with selling agents. We also advise broker dealers engaged in wealth management businesses on compliance program design and regulatory matters. Our regulatory advice covers all aspects of broker-dealer laws, including FINRA rules and regulations, including qualifications and licensing of associated persons.
o Securities Act of 1933. We provide drafting and advice on compliance program requirements for advisers and broker dealers who engage in private placements, and review of the basis for the private offering to the investor and that the Fund including filing Form D with the SEC on behalf of the private offerings to avail themselves of the private securities offering safe harbor under Rule 506(b) or Rule 506(c). We also regularly manage State blue sky filings for our private fund adviser clients
o Investment Advisers Act of 1940 (“Advisers Act”). Together with fund management we support advisers to private funds and registered investment companies on compliance and regulatory needs, review applicable exemptions that may be available to clients under the Advisers Act, including the foreign private advisers exemption, venture capital exemption and private fund advisers exemption. In addition, we handle all regulatory filings with the SEC, including any “exemptreportingadviser”filingsandfullregistrationswiththeSEC,includingthedraftingofCodes of Ethics and Compliance Manuals and we provide advice on the implementation and ongoing maintenanceoftheprogram.
o Investment Company Act of 1940 (“Company Act”). We provide drafting and advice on the design of compliance programs needed for investment companies registered under the Company Act, as well as advice concerning techniques for the implementation and ongoing administration of thesame.IntheeventprivatefundsareformedinordertoconductaU.S.offering,wewouldadvise ontheregulatoryexemptionsavailabletosuchfundsundertheInvestmentCompanyAct,including the 3(c)(1), 3(c)(5) and 3(c)(7) exemptions, as well as investor due diligence obligations imposed on themanagertodemonstratecompliance.
REGULATORY & COMPLIANCE
o Commodity Exchange Act Regulation. We provide drafting and advice on the design of compliance programs needed for commodity pool operators and commodity trading advisers required to be registered under the Commodities Exchange Act (“CEA”) with the National Futures Association ("NFA”), as well as advice concerning techniques for the implementation and ongoing administration of the same. In addition, we advise on the availability of any exemptions to registration or filing obligations under the CEA (applicable to commodities, currencies, and swaps), including any commodity pool operator (CPO) and commodity trading adviser (CTA) filings. A broad exemption from registration exists for low levels of activities in these instruments, and standard exemptionsexistforofferingsinprivatefunds.
o Employee Retirement Income Security Act (“ERISA”). For offers of securities or advisory services to pension plans or other investors whose assets constitute plan assets under U.S. law, we would adviseontheobligationsimposedunderERISAandtheguidelinesthatthefundsoradvisersshould followinrespectofERISAinvestorsorclientstoensurethatsuchadvisersorfundsdonotbecomea fiduciary of any ERISA plan investor, or are prepared to comply with ERISA and the DOL and IRS regulationsthatmayapply.
o Examination and Enforcement Support, and Mock Audits. We provide support to advisers and funds, or broker dealers when they undergo examination by the SEC, FINRA, CFTC, NFA or State securities regulators. We regularly conduct SEC & FINRA mock audits and focused compliance reviews on behalf of our clients. Led by a former Chief Compliance Officer with nearly 30 years of experience in managing regulatory examinations and relationships, these reviews and audits encompass a review of compliance policies and procedures that are required to be maintained by a client under federal and state securities and commodities laws and regulations. Together with the firm’slitigationteam,wealsosupportourclientswhentheyarerequiredtorespondto enforcement inquiries from the regulators. Our team leverages its multidisciplinary expertise to provide insight intobestpracticesfromacompliance,enforcement,andbusinessperspective.
REPRESENTATIVE TRANSACTIONS
• RepresentedBramshillintheirpurchaseofaRIA anditsmutualfundoperationsandemployees.
• Rollupofa$500Mregisteredinvestment adviser
• RepresentedSkybridgeCapitalinconnection withitspurchaseofCitiGroup’shedgefund businesswith$4.2Bofassetsunder management
• Representedaninvestmentmanagerin connectionwiththepartialsaleofitsbusiness, includingaworkouttoextricatethesellerfrom certainliabilities
• Representedaplatforminonboarding independentRIAteamw/compliance, employmentandtechnologyagreements.
• Representedteamfromwirehouseinliftoutto establishanindependentRIA.
• Representationofinvestmentmanagement companyascollateralagentinrated, institutionalCLOoffering
• Representedinvestmentmanagementcompany assyndicatorandcollateralagentinunrated offeringofbondsofsecuritizationvehicle focusedonlifesettlementsassets
• Multiplerepresentationofinvestment managementcompaniesinconnectionwith securitizationsandsyndicationsofinvestment assets
• RepresentedPEbackedfirm,oneofthelargest specialistfundadministrationandmiddleoffice solutionproviders,inmultipleacquisitions.The $8milliondollaracquisitionfurtherexpanded Apex’sfootprintintheU.S.andCanadian marketplaceandincreasedthevisibilityofthe Apexbrandworldwide
• Servedasco-counselintheportfoliorollupand refinanceofLawCashin$180milliondollarsale ofassets
• Representedalargeaccountingfirminitsspin outofitsfinancialadvisingpracticeand structuredandmergedwithanotherlarge advisingfirmtoform.Thetotalaccountunder managementofthenewfirmwas$3Batthe timeofthetransaction.
• $125Mrefinancingandbuyoutofspecialty lendingcompany
• $100Msaleofafinancialplanningcompanytoa privateequityfirm
• Saleof$125Mmiddlemarketfinancingcompany
• Saleof$70Msoftwareprovider
• Saleof$95Maerospacepartsprovider
• Purchaseof$65Mmilitaryapparelcompany
• Purchaseof$85Mfinancialadministration company
• Saleof$40MMadministrator
• Reversemergerandpurchaseoftelecom companies
• $125Msaleofinternettextilecompanytoa Fortune50company
• Representationofsyndicatorinprogramof securitizationsforemergingmarketcompanies
REPRESENTATIVE CLIENTS
We have represented a diverse variety of clients throughout our long history, spanning across several industries. These clients include, but are not limited to:
• ApexGroupLtd.(portfolio companyofGenstarCapital)
• FieraCapital
• Gramercy
• Investcorp
• Ripplewood
• TailendPartners
• BrownBrothersHarriman
• CrownVentures
• GAMCo.
• Ibex
• Neuberger
• SkyBridge
• TimberlinePartners
FEES
We view this assignment as a two-step process.
Step 1:
(i) Scope out best structure suited for client and its clients.
(ii) Review of underlying clients, situs of clients, and nature and duration of initial underlying investments.
(iii) Cost: $30,000,000
Step 2:
(i)Based upon findings discussion with client structure the master and feeder fund(s).
a. Based on our initial conversation the structure may be:
i. Create management entity(s) to act as CIO and I/M.
ii. Cayman Island LTD as master (or Cayman Island SPC)
iii. Cayman Island ELP as feeder (or Cayman Island LTD as feeder)
iv. US Domiciled Delaware LP as investment vehicle (or US Corp)
v. Management agreement w/ both US entity and the Cayman Master
(ii)Cost: $80,000,000 - $120,000,000
We expect that the cost for the scope of Sadis' work in forming and structuring the Fund would be approximately $90,000 - $150,000. The actual costs will depend on the time spent by lawyers on the engagement. Our fees do not include costs or expenses incurred by us, or fees charged by other services providers Nor does the estimate include any negotiations or structuring of the management entities on behalf of the principals.
While we will make every effort to be as efficient as possible, if terms of the offering change during drafting or are subject to significant comments from founding investors or service providers, your actual costs may be higher. However, if we keep it simple and receive only limited comments to drafts, our fee estimates may be conservative in relation to the actual costs in connection with our services.