Legal Risk Management Tips

As our older population in the United States (i.e., persons 65 years of age of older) continues to increase, so does the servicing opportunities of the financial industry.  According to the U.S. Department of Health and Human Services, in 2013 one in seven Americans (or 14.1% of the U.S. Population) was over age 65.[1] By 2040, that number is forecasted to grow to 21.7%.[2]  

For Registered Investment Advisers (“RIAs”), acquiring another investment adviser’s practice can often serve as an efficient means for quickly increasing the assets under management and profitability of the RIA, while also adding scale and efficiency to client services.  However, in light of the numerous regulatory and corporate considerations involved in such corporate combinations careful analysis and planning should be conducted prior to entering into a definitive agreement.  Not only will the acquiring RIA face legal and compliance obstacles, but the selling RIA often has a personal connection to the business being sold that needs to be considered. 

 The ability of a private equity fund’s manager to obtain capital commitments from investors is critical to the fund’s success.  Unlike hedge funds which provide managers with the ability to reinvest non-withdrawing investors’ investment proceeds, private equity funds have relatively limited reinvestment ability and generally must distribute investment proceeds to its investors.  Therefore, in order to keep making new investments, private equity fund managers must create and finance new funds every few years, which then requires new promotional materials for each new fund.