20+ Years of Experience
Our attorneys draw from an average of more than 20 years’ experience in private funds to provide practical and cost-effective solutions to small and mid-sized funds, investment advisors and institutional investors.
Our private funds group advises clients on the formation of private equity, venture, hedge, search, real estate and opportunity zone funds, as well as compliance with exemptions under the Investment Adviser, Investment Company and Commodities Exchange Acts. We advise investment advisers, fund managers, and institutional and high net worth investors on investment funds and secondary sales of alternative investments.
PRIVATE FUNDS ATTORNEY MINNEAPOLIS MN
Clients and Services
There are a wide variety of clients we serve and services we offer through our Private Funds practice group including:
- Formation of private equity, venture, hedge, search, real estate and opportunity zone funds and preparation of offering memorandums, fund agreements and subscription agreements
- Formation and structuring of management companies and unique ownership considerations
- Form D and related state compliance and filings for private offerings
- Form PF
- Analyzing registration exemptions under federal and state laws, including the Investment Advisers and Investment Company Acts
- Analyzing registration exemptions as a commodity pool operator (CPO) under the CFTC
- Structuring and negotiating strategic transactions involving funds and investment advisers, including mergers and acquisitions, divestitures, joint ventures and succession planning
- Review of fund offering materials for prospective investors and assistance in completing subscription agreements
- Negotiating secondary sales of alternative investments
- Finder compliance
Our Approach to Private Funds
We know that tax laws are complicated and, in some cases, extremely convoluted. We know and deeply understand the tax laws required to participate at any level in private funds. We have done structured funds that have never been done before because we have a high level of demonstrated experience and closed deals under our cumulative belts. We can simplify the complexities of private funds and develop solutions that will benefit your business, then clearly communicate the intricacies of the deal and the inherent tax saving you will achieve.
Private Funds Services Experience
- Structuring and formation of $100M tax-advantaged multi-asset real estate opportunity zone investment fund
- Formation of hedge fund investing in crypto currencies
- Representation of institutional investors as LPs in private funds and alternative investment vehicles, including review of LP Agreements and completion of subscription agreements
- Representation of institutional LPs in secondary sales of interests in Private Funds
- Structuring and formation of a multi-asset opportunity zone fund focused on triple bottom line impact investing in Minnesota
- Structuring, formation and securities law compliance for a variety of single asset opportunity zone funds developing and constructing various real estate projects in the Twin Cities
What Our Clients Say
“Lisa has been a tremendous asset in achieving GBR’s acquisition strategy. Deeply experienced in M&A, she uses that knowledge to help guide the deal while retaining common sense and practicality in her recommendations. Responsive and customer-focused, she’s been great to work with and continues to be a valued member of my team.” – Michael Kelker, Operating Executive
PRIVATE FUNDS VIDEOS
Frequently Asked Questions about Private Funds
All private funds need to consider the ramifications of three incredibly important acts:
- The Securities Act of 1933: This act prohibits public offerings of securities without registration.
- The Federal Investment Advisers Act of 1940: This act regulates investment advisers, generally defined as those who are paid to advise others on investing in securities. The general partner or management company of a private equity fund is considered an investment advisor by the SEC.
- The Investment Company Act of 1940: This act regulates investment companies that engage in the business of investing in the securities of other companies. It imposes extensive and substantive requirements on registered investment companies which are not compatible with the business plan and management structure of a typical private equity fund.
In addition, funds can also be subject to state investment advisor laws.
In order to qualify as a private offering, exempt from registration under the Securities Act of 1933, most issuers and funds use Rule 506 of Regulation D. This rule requires the funds to offer securities to accredited investors. The most common types of accredited investors are individuals with gross income exceeding $200,000 in each of the two most recent years or joint income with a spouse or partner exceeding $300,000 for those years and a reasonable expectation of the same income level in the current year; persons whose individual net worth, or joint net worth with that person’s spouse or partner, exceeds $1,000,000, excluding the person’s primary residence; and certain entities with total assets in excess of $5,000,000.
Qualified purchasers are relevant under the Investment Company Act (Company Act). Any fund that sells interests only to qualified purchasers avoids registration of the fund under Section 3(C)7 of the Company Act. The most common types of qualified purchasers are natural persons and family-owned companies each owning $5 million in investments and entities owning $25 million in investments.
In Minnesota, to meet the private fund advisor exemption under the Minnesota Securities Act (the state version of the Investment Advisors Act), all the investors in a private fund must be qualified clients in addition to being accredited investors. A qualified client is an investor who has invested $1,000,000 with the fund, has a net worth of $2.1 million excluding the value of a primary residence, is a qualified purchaser, or is an officer or director of the fund manager or an employee who participates in the investment activities of the investment advisor.
Minnesota law requires licensure of investment advisors doing business within the state of Minnesota, unless the investment advisor meets an exemption (Minn. Stat. Section 80A.58). If the principals of a fund have an office or work outside of Minnesota, then they are subject to this law in addition to the federal Investment Advisers Act of 1940. The most common exemption is the private fund adviser exemption. To meet the private fund adviser exemption, one must meet both of these qualifiers:
- Neither the private fund adviser nor any of its advisory affiliates are subject to a disqualification as described in Rule 262 of SEC Regulation A, Code of Federal Regulations, title 17, section 230.262; and
- The private fund adviser files with Minnesota each report that an exempt reporting adviser is required to file with the Securities and Exchange Commission pursuant to SEC Rule 204-4, Code of Federal Regulations, title 17, section 275.204-4 (Form ADV).
In addition, if the private fund advisor is advising 3(c)(1) funds (other than VC funds):
- All of the investors in the private fund must be “Qualified Clients.” A Qualified Client is an investor who meets at least one of the following criteria:
- has invested $1,000,000 with the investment adviser; or
- has a net worth of $2,100,000 (excluding the value of a primary residence); or
- is a “qualified purchaser”; or
- is an officer or director of the fund manager or is an employee who participates in the investment activities of the investment adviser and has been doing so for 12 months.
- The private fund must obtain audited financials; and
- The private fund must disclose to investors all services provided, duties owed to investors, and other material info.