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Professor Sarah Paterson and Dr Simon Witney (Visiting Professor in Practice), assisted by guest teachers David Dowling and Sean Pierce.

Simon Witney and David Dowling teach weeks 1-5, and 7-9. Sarah Paterson and Sean Pierce teach weeks 10 and 11.  Week 6 is Reading Week.

This course is available on the LLM (extended part-time), LLM (full-time) and University of Pennsylvania Law School LLM Visiting Students. This course is available with permission as an outside option to students on other programmes where regulations permit.

Students should note that private equity is a specialist asset class, and the basics of debt and equity are not covered in LL4CQ. The course is, therefore, recommended for students who are taking other, relevant corporate law and financial law courses, or who have relevant experience.

This course has a limited number of places and demand is typically high. This may mean that you’re not able to get a place on this course.

This course will equip students with a detailed understanding of the legal structures and issues arising in international private equity and venture capital.  It is founded on deep academic analysis of pertinent theoretical and legal issues complemented by insights from relevant practitioners.  It will have a UK focus but will include relevant aspects of European Union law with comparative global perspectives. 

Class 1: Introduction to private equity and venture capital and some basic theory

This class will introduce the legal structures and commercial dynamics of private equity and venture capital and the theoretical frameworks that will underpin the course.  We will also review some pertinent academic literature.

Class 2: Fund terms

In this class we examine the core economic and non-economic terms of a typical private equity or venture capital fund.  We consider the theoretical basis for these terms.

Class 3: Fund structures: the limited partnership

In this class we look at the limited partnership structure, examine why it is used and its main legal and tax characteristics.  We focus on the UK limited partnership, but also consider other equivalent structures.  We also look at other aspects of the typical private equity fund structure.

Class 4: Private equity fund (and manager) regulation

This session looks at UK and EU regulatory initiatives, and critically evaluates the provisions of the Alternative Investment Fund Managers Directive which affect private equity funds.

Class 5: Venture capital investments

Starting from a theoretical perspective, we will analyse the terms of a typical venture capital investment into a portfolio company by reference to example documents.  We will also examine various aspects of contract and company law which have particular relevance to VC structures.

Class 6: The VC deal: feedback from a practitioner

This week the students will discuss the key points arising from a venture capital investment case study with a leading VC lawyer.  We will focus on key points which have a legal as well as a commercial aspect, and connect these to the theoretical discussions in Class 5.

Class 7: The buyout: structure and terms

In this class we will examine the structure of a buyout and how it differs from a VC investment.  We will focus on pertinent company law rule and the main commercial terms.

Class 8: The buyout: corporate governance issues

In this class we will examine the ways in which private equity firms approach corporate governance.  We will consider this in the context of the UK legal framework and some recent developments in corporate governance regulation that apply to large, private companies.

Class 9: LBO debt financing

This week we will analyse and evaluate the structure of the LBO financing transaction; the relationship between the theory and practice of private equity and the legal terms found in the leveraged loan agreement; and the relationship between the theory and practice of private equity and the negotiating points which arise for the lenders and the PE sponsor on these legal terms.

In class, students will be provided with the Loan Market Association leveraged loan agreement and asked to apply the theory covered in the lecture and readings to the deal documentation.

Class 10: LBO debt financing (cont’d)

This week we will analyse agency theory and maintenance financial covenants; the rise of covenant-lite and covenant-loose financing for PE LBOs; and the implications of these developments.

In class, students will work in peer study groups to discuss certain readings on the implications of the leveraged model and the loosening of terms in PE LBOs.

This course will have 20 hours of teaching content in Lent Term. Students will usually have two additional hours in the Summer Term. This course includes a reading week in Week 6 of Lent Term.

A formative essay will be due in Week 7 and detailed feedback will be provided shortly after. The essay will have a word limit of 1,500 and will provide invaluable preparation for the summative assessment.

Example core readings:

Gilligan, J. and Wright, M., Private equity demystified: An explanatory guide (2020, 4th edition, Oxford University Press), selected chapters

Hale, C. (ed), Private Equity: A Transactional Analysis (2020, 4th edition, Globe Law and Business), selected chapters

Gullifer, L. and Payne J., Corporate Finance Law: Principles and Policy (2020, 3rd edition, Hart Publishing), Chapter 16 (Private Equity)

Jensen, M.C. & Meckling, W.H., “Theory of the firm: Managerial behavior, agency costs and ownership structure”, 1976, Journal of Financial Economics, 3(4), pp.305–360.

Talmor, E. & Vasvari, F., International Private Equity (2011, John Wiley & Sons), selected chapters

Witney, S., Corporate Governance and Responsible Investment in Private Equity (2020, Cambridge University Press)

Additional weekly readings will be provided to the students at the beginning of the course.

Take-home assessment (100%) in the ST.

Students will be given a period of time in which to complete and return a take home exam, with penalties for late submission. Students will be asked to complete 2 questions from a possible 6 (with a requirement to choose one question from Part 1 and one question from Part 2) and each answer will be limited to 1,500 words, with penalties for exceeding the word limits. The length of time set for this assessment already takes into account that students may also have one or more other exams during this period.

For more information regarding penalties, please refer to the LLM Handbook.