Private Equity Lawyers

Between sourcing and signing, much of the job of building up a successful fund is writing non-disclosure agreements (NDAs) and negotiating. The faster a fund manager can get quality startups in front of them, the better the chances of growing the fund faster than their competitors.

What matters for private equity and venture capital firms is speed and precision. Firms that maximize dealflow with the right legal support structures are the ones that will sign more deals at stronger allocations with the right targets.

What is Private Equity?

Private Equity and Venture Capital, also known as PE and VC firms, are two types of private investment firms that predominantly target unlisted companies.

The two are often confused with each other for three reasons – Venture Capital is a form of Private Equity; both frequently represent the same investment class; and both invest strongly in technology. What sets them apart is timing. PEs focus on late-stage startups, VCs will start investing much earlier.

What unites them is the dominance of the United States. According to capital market data leader Pitchbook, US Private Equity firm dealmaking surged to US$1.2 trillion (AUD1.6 trillion) in 2021, which was 64% higher than in 2020. Meanwhile, US VC-backed companies raised US$329.9 billion in 2021, nearly double the previous record of US$166.6 billion raised in 2020.

Meanwhile in Australia, the Preqin & Australian Investment Council Yearbook 2021 pegged the Australian private capital industry at a record-breaking A$77 billion in assets under management, which is larger than the market caps of all but a small handful of Australia’s listed companies. According to the KPMG Venture Pulse 2020/21 report, Venture Capital funding in Australia continued to increase between 1 July 2020 and 1 July 2021, to a record US$2.5 billion, up from US$1.95 billion in the previous year.

Examples of Private Equity and Venture Capital activity in 2021:

In September 2021, Australian graphic design platform Canva secured a valuation of US$40 billion after a fresh capital injection of US$200 million in a round led by T. Rowe Price. New and existing investors participated in the round, including Franklin Templeton, Sequoia Capital Global Equities, Bessemer Venture Partners, Greenoaks Capital, Dragoneer Investments, Blackbird, Felicis and AirTree Ventures.

In August 2021, US private equity giant Thomas Bravo completed a US$12.3 billion takeover of leading cybersecurity and compliance company Proofpoint. The transaction was the largest US private equity takeover of a cloud company, according to CNBC.

In July 2021, global private equity player EQT launched an unsolicited takeover bid for ASX-listed financial services software group IRESS, which was unsuccessful. IRESS has a market capitalisation above AU$2 billion.

In July 2021, Employment Hero tripled its valuation to A$800m after raising a A$140 million Series D funding round led by Insight Partners, a US-based Private Equity firm.

In December 2021, e-commerce marketing technology company Rokt broke the record for the largest Venture Capital raising in Australian history. The company secured A$458 million and a A$2.75 billion valuation. The round was led by US investment management giant Tiger Global, with participation also from existing local shareholders Square Peg, AustralianSuper and Hostplus.

How can we help?

At Biztech Lawyers, we help our Private Equity and Venture Capital partners scale their fund’s impact, leverage and reach with a variety of services tailored to increasing dealflow with the Australian and US technology sectors.

We have in depth knowledge in negotiating and documenting a range of startup investment transactions and subsequent divestment transactions:

Leveraged buyouts
Management buyouts
Trade sales
Mergers
Floats
Follow-on transactions

We also have strong capabilities and capacity for reviewing and processing NDAs for Private Equity firm transactions. In a year, Biztech Lawyers negotiates over 2000 non-disclosure agreements for US-based and non-US growth capital investments.

Usually an initial review takes 1-2 business days, although we always move faster when necessary. From time to time, an opportunity may involve co-investment or other third-party situation needing a joinder to an existing, underlying NDA.

The ideal scenario is for the client to reach a negotiated position on any given NDA within two turns of the document. Negotiations that are particularly difficult or important may require more time.