Private equity firms play a vital role in times of financial uncertainty by providing capital and liquidity where others won’t. But as a private equity investor, how do you structure your capital investment, be it in an existing portfolio company or as part of a new investment, with a view to managing downside risk and staying ahead in the capital structure? How do you support businesses that face short-term liquidity issues due to the COVID-19 crisis but maintain strong fundamentals? Leveraging decades of experience in the private equity, growth, structured equity and restructuring markets, our team has put together a checklist applicable to all private equity investors in times of financial uncertainty. This checklist covers the main instruments that a private equity investor would use to establish a strong position in the capital structure (including preferred equity, convertible loans and warrants) and the tools an investor would use to maintain its position and preserve its upside (including anti-dilution, minimum returns, exit demand rights, put and redemption rights).
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