The private funds industry is well past the point at which side letters have become ubiquitous. Fortunately, fund managers are now far more experienced and practiced at adopting techniques to mitigate some of the issues that can arise from juggling a surplus of potentially conflicting side letters – both at the front end of negotiating side letters and at the back end of managing the obligations contained therein over a fund’s life. The above issues were addressed by a panel at a recent Practising Law Institute (PLI) program, which was moderated by Skadden partner Anna Rips and featured Fola Adamolekun, executive director and assistant GC at J.P. Morgan Asset Management; Alison Horton, managing director and legal counsel at Davidson Kempner Capital Management; and Nicole Restivo, chief operating officer, GC and CCO at Key Square Capital Management. This first article in a two-part series discusses some complex issues from using form side letters for funds of funds (FOFs); difficulties for FOFs in simultaneous negotiations; and administrative challenges relating to side letters. The second article
will highlight challenges of managing most favored nation provisions in side letters and current hot topics in negotiations, with particular emphasis on terms relating to environmental, social and governance investing. For coverage of a previous PLI program, see “SEC Chief Counsel Advises on Exemptive Applications and Requests for No‑Action Relief
” (May 16, 2019).