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The Private Equity Contract

THE OXFORD HANDBOOK OF PRIVATE EQUITY, D. Cumming, ed., Oxford University Press, March 2012

Ohio State Public Law Working Paper No. 174

25 Pages Posted: 30 Mar 2012 Last revised: 3 Oct 2012

Steven Davidoff Solomon

University of California, Berkeley - School of Law; University of California, Berkeley - Berkeley Center for Law, Business and the Economy

Date Written: December 10, 2011

Abstract

This chapter examines private equity's unique contracting arrangements for the acquisition of public targets. The shifting terms and structure of the private equity contract are explored, including revisions made in light of the exogenous shock of the financial crisis. Private equity's standard contractual arrangements provide optionality to abandon agreed acquisitions expanding the universe of potential acquisition targets. I argue that the success of private equity is in part due to these unique transactional arrangements.

Keywords: private equity, contracts, complex contracts, contractual design

Suggested Citation

Davidoff Solomon, Steven, The Private Equity Contract (December 10, 2011). THE OXFORD HANDBOOK OF PRIVATE EQUITY, D. Cumming, ed., Oxford University Press, March 2012; Ohio State Public Law Working Paper No. 174. Available at SSRN: https://ssrn.com/abstract=2031103 or http://dx.doi.org/10.2139/ssrn.2031103

Steven Davidoff Solomon (Contact Author)

University of California, Berkeley - School of Law ( email )

215 Boalt Hall
Berkeley, CA 94720-7200
United States

University of California, Berkeley - Berkeley Center for Law, Business and the Economy ( email )

Berkeley, CA 94720-7200

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