How’s Your Side Hustle? Perfect your Side Letter Drafting Skills

Drafting and negotiating a side letter is one of the most important, and delicate, interactions between fund and investor counsel. Funds in today’s marketplace should assume that most investors will demand side letters, and not just with respect to more favorable economic and/or governing terms, but also to address their specific needs in an increasingly complex investing environment. The provisions being sought in a side letter could be specific to a particular investor (e.g., those addressing an investor’s specific tax, regulatory, or policy issues) or be of the more traditional, “more favorable terms” variety that all investors would desire. If the private equity fund has many investors, particularly institutional investors, fund counsel may draft form side letter provisions that address each issue using the general partner's preferred language and terms. This helps to standardize the side letter process and ensures that each provision is consistent in the many side letters between the fund and its investors. 

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Related Content

• Side Letter for a Private Equity Fund
  Review this side letter template and quickly adapt the provisions to your client’s needs. Detailed drafting notes provide additional context and guidance.

• Most Favored Nation (MFN) Side Letter Clause (Private Equity Fund)
  Refer to this side letter provision to be used when an investor requests written assurance that it will have the same rights as some or all the other investors in a private fund.

• Limited Partner Advisory Committee (LPAC) Side Letter Clause (Private Equity Fund)
  Consult this clause that grants a limited partner the right to appoint a representative to the private equity fund’s limited partner advisory committee.

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