Investment transactions continue to become more complex as innovative investment products are developed and sold. Investors seek to improve their returns by investing in these new products. So-called “alternative investments” have become an important part of the portfolio of the institutional investor. These investments demand sophisticated legal analysis, a knowledge of the existing market and a knowledge of the particular laws and regulations to which each type of institutional investor is subject. Quarles & Brady has always been, and continues to be, unique in its attention to the investors and has a team of professionals focused on their particular legal needs.

Our Clients

Tax-Exempt Entities. Our Team represents various tax-exempt organizations, including universities, foundations, public charities, pension funds, hospital/health systems and state agency fiduciaries.

• We advise tax-exempt clients with respect to unrelated business taxable income (UBTI), including unrelated debt-financed income, in connection with their investments.
  
  
• We counsel private foundation clients on specific provisions of the Internal Revenue Code that may affect investment activities, such as the prohibitions on excess business holdings, self-dealing and jeopardizing investments.
  
  
• We work with fund managers to avoid penalty taxes, minimize income tax burdens and negotiate withdrawal rights or other appropriate remedies for tax-exempt clients.
  
  
• Our Team works closely with our clients to comply with state laws such as the Uniform Prudent Management of Institutional Funds Act (UPMIFA).
  
  
• On behalf of clients that invest pension plan assets, we review fund documents and fund structure to ensure that a fund’s assets do not become ERISA plan assets.

Taxable Clients. We represent insurance companies and other taxable organizations as well as high net worth individuals and family offices, that are subject to US taxation.

• We advise our clients of the tax burdens that they may face as a consequence of their investments.
  
  
• Our Team provides helpful counsel on the potential impact of foreign taxes and foreign tax reporting obligations.
  
  
• We are proactive in order to identify appropriate and lawful ways for our taxable clients to minimize domestic and foreign taxes.
  
  
• Our Team negotiates directly with issuers of debt and equity securities to obtain favorable terms that reflect the existing market.

Our Practice

Private Fund Investments. Institutional and high net worth investors contact us when they wish to make investments in private equity funds, hedge funds, commodity funds, funds-of-funds, real estate funds and “long” equity and fixed income funds to assist in the following areas:

• Advising clients on market terms and engaging in negotiations with fund managers to align their interests with those of our clients.
  
  
• Counseling clients on the implications of the language in investment documents and negotiating with fund managers to ensure that the legal documents reflect the business deal clients expect.
  
  
• Closely monitoring trends and developments in the marketplace, such as the Private Equity Principles of the Institutional Limited Partner Association (ILPA).
  
  
• Reviewing, structuring and negotiating side letter agreements, including “most favored nation” terms for clients.
  
  
• Following the constantly changing regulatory environment for fund managers and advising investor clients on how such changes may affect them.
  
  
• Tracking the latest legislative and case law developments in corporate governance and advising clients of best practices in this area.

Secondary Fund Transfers. Our Team has closed a substantial number of secondary transactions, representing both buyers and sellers. We understand the nuances of these transactions and are able to close them quickly and cost-effectively. We understand the role of the fund manager and strive to protect our investor clients while preserving each client’s relationship with the fund manager and obtaining the consent of the fund manager to the transfer.

Institutional Private Placements. We represent syndicates of insurance companies and other financial institutions in both debt and equity securities investments as well as their participation in project financings, asset-backed and other structured financings, credit-tenant financings and mezzanine-debt financings. Because we have also represented publicly traded and large privately held companies in which these syndicates have invested, our Team has insight into both the investor’s and the issuer’s concerns. As a result, we bring a special set of skills to this practice that allows us to better serve our investor clients.

Investment Management Agreements. Our Team reviews and negotiates agreements governing specially managed accounts with investment managers to ensure they include appropriate safeguards against mismanagement and appropriate remedies in the event a manager breaches its obligations to our clients.

Investment Policies. Our Team members can provide helpful guidance as our clients create and maintain their investment programs and guidelines.

Derivatives and other Investment Products. We navigate confidently in this environment, reviewing and negotiating agreements for derivative investments such as “swaps” and other investment products.

Special Investments. Our high net worth clients often invest in projects in which they have a close affinity, whether because of special industry knowledge or a special social concern. We work closely with these clients to structure their project investments in a manner that meets their financial and non-financial goals.

Our Investor Services Team

Our Team brings together the talents of attorneys from our Corporate Services, Tax, Tax-Exempt and ERISA teams to ensure that we can service each type of institutional investor. Our attorneys are active in the American Bar Association’s Institutional Investor Committee, the American College of Investment Counsel and many other professional organizations. It is a unique team for a unique client base.

For more information on how our Investor Services Team can help you with respect to the legal analysis of your investments, please contact John P. Vail at (312) 715-5042 / or your Quarles & Brady attorney.