Role of Buyside Lawyers in Private Debt Offerings
What exactly is the role of securities lawyers that are hired by private equity/private credit investors in private credit offerings? Are they there just to read over all the legal and credit documents to make sure the more legalese covenants are kosher from the issuer's legal counsel? I was reading this presser on FP doing a financing for Eventbrite and saw they hired both Jefferies and Akin Gump AND Kirkland Ellis as advisors. In my view I'm not exactly sure why FP needed 2 legal advisors and an investment bank (making financial analysis powerpoints that is also surely FP's expertise & bread and butter) to help them do this deal.
The reason fo hire two firms and an investment bank is to CYA from the firm and management’s perspective. If anything went wrong from a legal perspective (this is a rare event that, when it happens, gets very ugly), having two law firms and an investment bank shows they acted with due care and responsibly. Although FP can do the financials, having that third party is helpful if executives or the firm run into trouble.
in terms of the nuts and bolts of what the securities lawyers do, yes that is largely correct except the outside firms are more involved than merely reviewing, they certainly drafted the forms. Although the client has in-house counsel, in-house counsel tends to be older attorneys who farm out the work to law firms. The in-house attorney was trained to do some of it as an associate, although the actual practice of law does not take up as much of their time. Especially at the GC level, the in-house attorney handles multiple sources of legal risk (securities, labor compliance, lease administration etc.)
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