Private equity firms are playing an increasingly important role in the American capital markets. This shift has been spurred by both businesses and investors. Companies find private equity more attractive in large part because of the Sarbanes-Oxley Act of 2002 (SOX), which imposes significant internal control, auditing, and reporting requirements on public companies. Institutional investors, meanwhile, have sought opportunities to add value to portfolio companies by managing the managers, bringing industry expertise, and adding needed capital to portfolio companies. Due to this increase in private equity financing, many principals and managers from private equity firms now serve as directors of the private equity fund companies in which those private equity firms invest. This trend has raised the prominence of legal and business issues related to the fiduciary duties of directors, as well as specific issues related to the intersection of private equity firms and the portfolio companies in which they invest.
At Foley’s sixth annual National Directors Institute on March 8, 2007, these issues were addressed in a breakout session entitled “What Private Equity Firm Directors Need to Know.” The discussion featured Foley & Lardner partners Paul Broude and Allen (Sandy) Williams, Jr., along with Sean Eagle, principal, American Capital Strategies, Ltd., and James Reddinger, executive director, UBS Securities LLC.
