Clifford Chance
Practical Tips for Deploying Private Equity's "Dry Powder" into Strategic Minority Positions
July 29, 2020
With record levels of dry powder remaining uncalled by private equity sponsors globally, sponsors are considering the most effective way to deploy it.
The minority investment offers a potentially attractive option. Minority investments have been gaining in popularity with private equity sponsors over recent years and this investment approach may become even more popular in light of recent market volatility.
This presentation offers background as to the growing popularity of, and aims to provide practical tips to consider when executing on, the minority investment. Specifically, the presentation covers tips on:
- Protection mechanisms: diligence, representations and warranties insurance, structural priority, side arrangements and anti-dilution
- Control and influence: stockholder and board level controls
- Information rights and underperformance: frequency and scope of reporting and step-in rights
- Liquidity and exit: lock-up, ROFO/ROFR, tag-along, drag-along and exit via private sale or IPO
