Fund-Lite Product:

Cost-effective, legal, tax and structuring solution for deal-by-deal financings

For asset managers seeking to raise money and close investments, Fund-Lite structures allow them to launch or continue their investment programme. To assist asset managers efficiently close deal-by-deal financings, MJ Hudson has developed a cost-effective, tax-efficient legal product called a Fund-Lite. These funds can be based in the UK, Channel Islands or Cayman.
MJ Hudson, a law firm solely committed to the Alternative Assets industry, has, since 2010, advised on more than 20 Fund-Lite Products for GP clients. We offer expertise and the ability to advise, in a cost efficient manner, on all aspects of an investment and the establishment of the fund. The Fund-Lite Product means GPs appoint one adviser, MJ Hudson, that in turn project manage and deliver all fund, structuring, tax and M&A legal advice, both on-shore and off-shore, for a fixed price. MJ Hudson partners with the leading off-shore law firms to deliver this product.

What is a Fund-Lite?
An investment vehicle, often structured as an off-shore investment limited partnership, formed for a pre-identified target deal, which will own one investment. The terms of the Fund are lite, because they typically omit certain concepts that are often found in blind pool capital funds: Investment Period; No Fault Divorce; Key Man; Diversification of Investments; Co-Investment Rights; Advisory Committees; Successor Fund Restrictions. However a Fund-Lite is a fund for the purposes of structuring efficiently, better GP economics and building track record. Advantages to GPs of Fund-Lites
Fund-Lite structures offer GPs and fund investors a number of advantages, and can align many of the interests of both parties.  Deal-by-Deal Carry ensuring the GP has the benefit of deal-by-deal carry, without the historic or new investments contaminating carry entitlement, thus enabling GPs to be rewarded for each successful deal.  Better Manager Economics GP ability to obtain higher management fees and possible transaction fees.  Track Record the opportunity to create / continue a track record (as each Fund-Lite is a mini investment fund).  Flexibility the use of a partnership provides flexibility which is helpful when seed investors are entitled to a share of the management fee and / or carry.  Control investors remain passive partners within the hierarchy of the partnership (limited partners in funds are not normally permitted to be involved in the management of a fund).  Bridge acting as a bridge to larger pools of committed capital.

Scope of Work
MJ Hudson leads and project manages all of the M&A and investment funds / financing aspects of the project. A typical Fund-Lite will entail: Upstream Work  Producing a detailed Structure Note and reviewing the PPM  Drafting and negotiating the key Fund documents (Investor Term Sheet/ Limited Partnership Agreement / Management arrangements and Investment Advisory Agreement)  Establishing Management and Carry arrangements in a tax efficient manner UK Regulatory advice

Fees
As an alternative to the larger, traditional law firms, MJ Hudson can charge a more flexible, transparent rate. Legal costs for the Fund-Lite product can be fixed.

Downstream Work  Managing Legal Due Diligence process  Producing (if requested), a Legal Due Diligence Report Reviewing Acquisition Term Sheet  Drafting and negotiating the key Acquisition documents (SPA / Tax Deed / new Employment Agreements, and Disclosure Letter) Leading Closing process

MJ Hudson | www.mjhudson.com | t: +44 (0)20 3463 3200 | e: info@mjhudson.com