Mechanics and Tax Treatment of Private Fund Conversions to Registered Funds

Investment management partner Leila Vaughan authored an article for the Private Equity Law Report titled “Mechanics and Tax Treatment of Private Fund Conversions to Registered Funds.”

In this article, the first of a two-part series, Vaughan provides an overview of how private funds convert to regulated investment companies, including the tax consequences, requirements for a tax-free conversion, and issues related to certain owners of the converting private fund.

“Private fund conversions are appealing as a way to enable fund sponsors to expand their investor base by recruiting retail investors to join interval funds, tender offer funds, and other types of registered funds,” Vaughan notes. “Some sponsors convert long-standing private funds to add a retail investment base, while others may form private funds with an end goal of establishing registered funds after a brief ramp-up period.”

The full article is available to subscribers of the Private Equity Law Report.