Madgett LawMinneapolis · Minnesota

Private Equity

Private equity fund counsel in Minneapolis, Minnesota: LP agreements, acquisition due diligence, and outside general counsel work.

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A badly drafted LP agreement causes problems for the life of the fund. And the fights rarely come from the headline economics. They come from the paragraph nobody negotiated because it looked procedural at the time.

We do two kinds of work for private equity funds: the LP agreement, and the evaluation of each acquisition. We can do it deal by deal or as the fund’s outside general counsel, and for most funds the second works better. Counsel who already knows the fund documents and the portfolio doesn’t have to be brought up to speed on every deal.

LP agreements

  • Drafting and negotiation. We draft and negotiate the agreement that sets out the rights and responsibilities of the general partner and the limited partners, with the regulatory requirements that apply to the fund built in.
  • The paragraphs that turn into disputes. Capital call mechanics and default remedies, the distribution waterfall and clawback, key-person and removal provisions, expense allocation, and the scope of the GP’s discretion. We write those with the eventual disagreement in mind, and put a way to resolve it in the document.
  • Your fund, not a form. Every fund has its own investment strategy and risk profile. The agreement should be written for yours.

Acquisitions

  • Due diligence. We look at what liabilities travel with the target and what the deal actually depends on: the contracts that carry the revenue, litigation and regulatory exposure, employment and benefits obligations, IP ownership, and whether the financials reflect reality.
  • The deal points. Financial projections, legal risk, and regulatory compliance, and what each one means for the fund.
  • Fit and risk. We look at how the target fits the fund’s strategy and where the risk sits. A risk that diligence can’t eliminate should be priced or allocated in the agreement, not absorbed silently. I’d much rather find it before closing than after.

Talk to us

To schedule a consultation, send us a message or call 612-470-6529. Bring the fund documents, or the materials on the deal you’re looking at.

Common questions

What does a private equity fund actually need a lawyer for?

Three recurring things: the fund documents that govern the relationship with limited partners, the diligence and structuring on each acquisition, and the disputes that surface when a portfolio company or a partner underperforms. The first is where the most durable value sits, because a badly drafted LP agreement causes problems for the life of the fund.

What terms in an LP agreement cause the most trouble later?

Capital call mechanics and default remedies, the distribution waterfall and how clawback is handled, key-person and removal provisions, expense allocation, and the scope of the GP's discretion. Disputes rarely arise from the headline economics — they arise from the paragraph nobody negotiated because it seemed procedural at the time.

Do fund interests count as securities?

Interests in a fund are generally treated as securities, which brings registration and disclosure obligations at both the federal and state level unless an exemption applies. Exemptions have conditions, and the conditions are where offerings go wrong. This should be settled before anyone is solicited, not after subscriptions have come in.

How much diligence is enough on an acquisition?

Enough to know what liabilities travel with the target and what the deal actually depends on. That means the contracts that carry the revenue, the litigation and regulatory exposure, employment and benefits obligations, IP ownership, and whether the financials reflect reality. Where the risk cannot be diligenced away, it should be priced or allocated in the agreement rather than absorbed silently.

Can you serve as outside general counsel rather than deal-by-deal?

Yes, and for most funds it works better. Counsel who already knows the fund documents, the portfolio, and the LP base is faster and cheaper on each transaction than counsel who has to be brought up to speed.

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