Debevoise Discusses Private Equity Options in Face of Liquidity Crunch

As significant economic sectors grind to a halt around the world due to coronavirus-related lockdowns and travel restrictions, many portfolio companies will face liquidity crunches, raising concerns for private equity fund managers and their investors. Uncertainty around the duration and extent of coronavirus-related business interruptions presents a further challenge for sponsors trying to manage financing needs across their portfolio. In this hazardous environment, many sponsors are considering how to preserve financial flexibility for present and future needs, including:

  • amending limitations on follow-on investments in the fund’s governing documents;
  • amending recycling provisions in the fund’s governing documents to permit additional re-investment;

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