Private Capital Investing

CHAPTER 12Legal Documentation

INTRODUCTION

There are several legal documents that are needed in a private equity or private debt transaction. The typical set of documents is the following:

• confidentiality agreement (non-disclosure agreement or NDA);
• letter of intent or term sheet.

Then, depending on the type of transaction (private equity or private debt), different documents are needed:

• private equity: constitutional documents, subscription, share sale and purchase, shareholders' and put and call option agreements;
• private debt: facility, intercreditor, security, hedging, and fee agreements.

In this chapter, the main legal documents are briefly illustrated. In Appendix 12.1 and 12.2, examples of a term sheet for a private debt and private equity deal are provided.

Confidentiality agreement (or non-disclosure agreement)

A confidentiality agreement (also called non-disclosure agreement or NDA) is a legal agreement that binds one or more parties to non-disclosure of confidential or proprietary information provided to a private equity or private debt fund. A confidentiality agreement is used in situations where sensitive corporate information is not to be made available to the general public or competitors.

The main terms of a confidentiality agreement are:

• Identification of the parties: the party providing confidential information can be referred to as the disclosing party and the recipient of the information can simply be referred to as the recipient. When the recipient ...