Jun 26 2024 6 mins 1
As a potential sponsor for syndications and equity funds under Regulation D, it's crucial to understand how investors can exit your fund. This usually happens in one of three ways: redemption, sponsor buyout, or right of first refusal. Redemption is common in open-ended or cyclical funds, where investors can get their money back at defined periods. A sponsor buyout allows you to set aside a certain amount for redemptions each year. If more investors want to be redeemed than the fund allows, redemptions are made pro-rata. Finally, the right of first refusal allows investors to sell their shares to other members in case of a life event. It's a market-driven activity, where the investor may have to sell at a discount due to urgency. While you can facilitate the process, it's best to let the negotiation be between the buyer and the seller. Remember, your aim is to ensure that your investors feel safe and comfortable with the process while maintaining control over your fund.
Read more about Reg D - What is Reg D? The King of Securities Exceptions: https://www.moschettilaw.com/reg-d/
Read more about PPMs - What Is In A Private Placement Memorandum?: https://www.moschettilaw.com/private-placement-memorandum-attorney/
Moschetti Syndication Law Group is a boutique syndication law firm, serving small and growth-bound syndicators, as well as private equity firms. Our attorney, Tilden Moschetti, is determined to keep the firm’s ‘boutique’ size so we can tailor the services to each client’s unique needs without turning the firm into a faceless factory churning out private placement memorandums or passing unnecessary overhead expenses onto our clients. (As our client, you’ll only pay a fixed fee, so no surprises.) As for the client experience, we give real-time answers with Tilden Moschetti without making you book an official appointment or get passed along to associates or paralegals. We’ll work with your ambitions and overall vision to help you close the current deal and fill in that ‘missing’ piece – whatever you need – to keep adding more syndications to your portfolio. We keep syndicators syndicating (TM).
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