Side letter management may conjure visions of law firm associates hunched over enormous spreadsheets as they seek to capture the nuances of countless side letter terms. Even if fund managers are able to keep different side letter versions and iterations of provisions to a minimum, the process of documenting triggers and obligations can be daunting. The responsibility for creating what are often called side letter matrices may often fall on external counsel, but internal fund teams must, at a minimum, be aware of events in their wheelhouses that trigger side letter obligations. Further, appointing one internal team or person as the “quarterback” of the side letter management system is strongly advised. This second article in a three-part series explores which internal or external functions or persons should be responsible for side letter management; how to effectively document obligations and triggers; and what better technology is needed for that purpose. The third article will consider effective tracking systems; the need to test compliance; and the most favored nation election and monitoring process. The first article
discussed the importance of effectively managing side letters and the challenges fund managers face in doing so, as well as how forward-thinking negotiation can set advisers up to manage side letters more easily. See our two-part coverage of an HFLR and Seward & Kissel webinar: “Key Side Letter Terms
” (Nov. 16, 2017); and “Side Letter Trends
” (Nov. 30, 2017).