The secondaries market has expanded and evolved in recent years, becoming more sophisticated with each economic cycle. It was the period immediately after the last financial crisis that sparked renewed focus on secondaries transactions, but over the past few years, we have seen transaction volume go from $50 billion in 2017 to $85 billion in 2019.
The COVID-19 pandemic has further highlighted the importance of allocating assets efficiently across different portfolios and managers to ensure continued growth, taking into account market conditions and stage of development. In 2020, we have seen increased diversification in the equity positions being taken by our clients and continued interest in GP-led transactions. We are confident that the secondaries market will continue its upward trend as some version of normalcy returns.
Goodwin’s Secondaries practice brings together an international team of lawyers with extensive experience in domestic and global cross-border secondaries transactions. We collaborate across our top-notch investment funds and M&A transactional practices to provide advice tailored to the needs of our clients’ transactions, drawing on our bench of creative tax and regulatory specialists to help land on the right structure and navigate compliance with the Investment Advisers Act, Hart-Scott-Rodino, CFIUS and tender offer rules.
Our leadership in mid-market private equity, real estate, infrastructure and venture capital across both transactional and fund formation work uniquely positions Goodwin’s practice and ensures we are best placed to provide cutting-edge guidance in key asset classes where the secondaries market continues to flourish. With decades of experience across these asset classes, our lawyers have developed longstanding, deep relationships with some of the most active investors. These relationships provide us with market insights and a detailed understanding of the portfolio management requirements, liquidity needs and key issues that may arise for fund managers and their limited partners.
We provide our clients – sponsors, buyers and sellers – with legal advice in connection with all types of secondaries transactions, ranging from LP transfers to the most complex GP-led restructurings, both in the United States and internationally. We have deep knowledge on advising on recapitalizations, preferred equity structures, tender offers, stapled transactions, single asset transfers, synthetic secondaries, strip sales and portfolio deals. Additionally, we represent secondaries funds and funds-of-funds in connection with their fund formations.
Our work for clients includes:
- Structuring of the transaction, including tax and regulatory input
- Analyzing potential restrictions and other requirements both at the portfolio company and fund levels
- Drafting and negotiating consents/election forms and disclosure materials
- Drafting and negotiating purchase and sale agreements, contribution and redemption agreements, or merger agreements as the transaction may require
- Drafting and negotiating new fund vehicle documentation
- Making regulatory filings as required
- Facilitating and coordinating the process among the various parties involved, including the client team, portfolio company, financial advisor/placement agent, valuation agent, buyers and sellers