Traditional fund Bilaws?
March 01, 2021
by a searcher from Harvard University in Middletown, CT, USA
I am looking to review legal documents for a traditional search fund. Things like Bilaws / Management Agreement / Contract etc. (I'm not looking for PPM) Does anyone have a closed fund that would share a blank copy with me to review? Pls send to redacted
from University of Minnesota in Minneapolis, MN, USA
In my experience, the 3 most common areas where issue arise within closely-held businesses/searchfuncs are: 1) Money (who gets paid what and how is that decided? What happens if we need more capital?), 2) Power (who makes the decisions generally? How are votes allocated? When do we need majority/super-majority/unanimous consent on a business decision?) and 3) Succession Plans (what happens if an owner dies/declares bankruptcy/doesn't want to be an owner any more? How will the Company retain ownership with adequate flexibility to maintain daily operations of the Company? What if an owner/employee gets fired?).
In my limited experience, smaller companies tend to over-think the Operating Agreement, and larger companies tend to under-think it. I think it's a good idea to make sure that your primary concerns are addressed in the document in a manner that is clear and understood by all the stakeholders. Talk to a lawyer that you trust that is used to working with businesses that are the same size as your fund, and hopefully you can get clarity on costs up front. While governing documents are important, don't let the legal tail wag the business dog.
And please make sure to loop your tax advisor in on the financial aspects to say on the right side of our good friends at the IRS!
I don't have any redacted templates available to share right now, but a document that was previously shared publicly by ^redacted can be found here: https://docs.google.com/document/d/1_ZyxA_BqwZPKJwvD4ckIRJTYtjkIJYQx/edit. Thanks to Jordan for sharing that!
from University of California, Berkeley in San Francisco, CA, USA