Leveraged Buyout Fund Formation
Fund terms, acquisition financing and portfolio company work for buyout sponsors
Private equity, with leverage built in
A buyout fund is a private equity fund built around a specific way of investing: acquiring control of companies using a mix of fund equity and borrowed money, improving them and selling them. The fund documents follow the private equity model, but the leverage adds its own issues: lender consents, guarantees, how debt at the portfolio company interacts with the fund's own borrowing, and what investors are told about it.
We form buyout funds for first-time sponsors and established firms, and we handle the deal work that follows: acquisition agreements, financing documents and portfolio company governance.
What is a leveraged buyout fund?
A leveraged buyout fund is a closed-end private fund that acquires controlling stakes in operating companies, financing each acquisition partly with debt secured by the target's own assets and cash flow. Investors commit capital for a fixed term, the sponsor calls it as acquisitions close, and returns come from selling or recapitalizing the companies. Fund terms typically cover management fees, carried interest, the investment period, key-person provisions and limits on how much leverage the fund and its portfolio companies may carry.
What we do
• Form the fund, general partner and management company
• Draft the limited partnership agreement, subscription documents and private placement memorandum
• Negotiate acquisition agreements and review financing documents for each deal
• Advise on portfolio company governance, management equity and exits
Planning your first buyout fund, or your next one?
Tell us about your targets, your financing sources and your investors, and we'll propose a structure and a flat fee. Or call +1 (202) 556-4455.