Davis Polk partner and Investment Management head Leor Landa shared his thoughts with Bloomberg Law on the SEC’s proposed rule that would require fairness opinions before investors create continuation funds – also known as secondary funds. Leor noted that continuation funds – which allow investors to hold assets until better market conditions arise – are often “the fourth exit” in addition to mergers and acquisitions, IPOs or sales to other investors.

Leor explained that the fairness opinion proposal is “a little bit of a solution looking for a problem” because the buy side of continuation funds already knows when to push for opinions and when such opinions would be too expensive to be worth it.

“Private Equity’s ‘Fourth Exit’ Crimped by SEC Plan, Lawyers Say,” Bloomberg Law (May 19, 2023) (subscription required)

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