This course will study private investment funds, with a particular focus on buyout funds. It also will cover other forms of private investment funds, such as venture capital and hedge funds. Students will examine the economic and legal relationships between a fund's sponsor (i.e., the general partner) and a fund's investors (i.e., the limited partners), as well as the economic and legal relationships among a fund's managers, inter se. Areas of focus will include whether present-day funds, from an economic and legal perspective, are, in fact, structured in a manner that results in "alignment of interests" rather than "conflicts of interest" between fund sponsors and managers, on the one hand, and fund investors, on the other.
Other issues to be examined in the course include (I) the regulatory framework within which private investment funds operate, including certain aspects of the Securities Act of 1933, the Securities Exchange Act of 1934, the Investment Company Act of 1940, the Investment Advisers Act of 1940 and ERISA that relate to the offering and management of private investment funds, and (II) a discussion of certain tax considerations involved in structuring private funds, such as "carried interest" incentive arrangements. Changes in the regulation of private investment funds in light of recent events also will be discussed.
A multidisciplinary approach will be used, combining economic, tax and legal analysis of the subject matter. Guest speakers will include representatives of a leading private equity firm. Students will participate in a case study of such firm and a negotiation exercise involving the terms of a fund to be sponsored by such firm. Ideally students enrolled in this course will have some background in finance, accounting, taxation, and securities law.
A package of course materials will be provided by the instructors.
Students on the wait list will be admitted to the course only by permission of the instructors.
This course is also open to Business School students.