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Overview
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 This
page summarizes select topics of interest
to private equity practitioners
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Alternative Trading Markets
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"Private
markets" for non-public securities
- Interest has developed in trading securities in
ways that avoid triggering Exchange Act registration and reporting requirements
- By relying on Rule 144A
- By keeping number of holders below 500
GS Tradable Unregistered Equity OTC Market
GSTrUE
- Private market developed by Goldman Sachs
- One deal reported in media, for Oaktree Capital Mgmt,
an alternative investment firm
- Sold 14% of its equity to 50 investors for
$800mm, valuing company at $5.7B
- Oaktree has $40B in assets under management
Nasdaq
Portal
- Nasdaq proposes to re-establish The Portal
Market
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Go-shop / No-shop Litigation
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Some
recent M&A deals have resulted in litigation
over terms of go-shop / no-shop covenants and payment of break-up fees
Commentary
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High Yield Offerings
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Commentary
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IPOs of Private Equity Firms
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Prominent
private equity firms going public
- Fortress Investment Group
- Och-Ziff Capital Management
- Oaktree Capital also did an $800mm private-public
deal
Commentary
- SEC Congressional testimony
- Transcript
7.11.07
- Discusses how SEC handles investment company
issues
Controversy
- Over firms such as Blackstone being taxed as
partnerships, even after going public
- Over firms such as Blackstone not being regulated
as investment companies
- Firms argue they're active managers of their
portfolio companies, for '40 Act purposes
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Tax Legislation Proposals
SEC_CODE_REF_0090001192884
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Taxing publicly-traded private equity firms as corporations instead of as partnerships
- Proposal introduced by Senate Finance Committee on 6.14.07
in response to Blackstone's IPO
- Committee press release
- Backed by Senators Baucus, Chairman (D-Mont.) and
Chuck Grassley, Ranking Republican Member (R-Iowa)
- New proposal would accelerate effective date
Taxing carried interest
as ordinary income,
for partners of private equity firms
- House proposal sponsored by Congressman Levin and others
Commentary
- Blackstone IPO risk factors
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Two-Step Tender Offers
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2006
changes to best price rule addressed impediment
to broader use of two-step mergers
Commentators
now expect more widespread use of
two-step mergers in private equity buyouts
- Can have timing advantages over a traditional
one-step merger
- Offer need only be open for 20 business days
- For exchange offers, SEC need only declare
registration statement effective by end of this offering period
- This advantage may be vitiated if lengthy
regulatory approvals are required
Some
recent private equity deals have been structured as
two-step mergers
Commentary
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Related Topics
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