Small Business Investment Company (SBIC) Practice
Practice Leader: Michael B. Staebler
Pepper Hamilton LLP has one of the country’s largest and most active Small Business Investment Company practices.
Pepper Hamilton serves the SBIC industry in the following ways:
- Fund formation
- Assistance in licensing
- Regulatory advice to licensed Small Business Investment Companies
- Fund investment activities
- Serving as counsel to portfolio companies
- Provision of advice concerning systematic improvements to the SBIC program.
Why Select Pepper Hamilton LLP?
It makes sense to select Pepper Hamilton as your SBIC counsel for the following reasons:
- Experience. Our SBIC Practice Group is led by Michael B. Staebler (in Detroit and Washington, D.C.). Mike ran an SBIC for six years, and has served as counsel to more than 160 licensed SBICs since 1972, including helping license 121 of them since 1994. He assisted NASBIC in negotiating the Small Business Administration regulations implementing the "New" SBIC program from 1992-94 and advised SBA on the creation of many of its forms and policies. Our SBIC team is deep. Doug Camitta has counseled dozens of SBICs for more than 20 years concerning regulatory matters, their formation and their investment activities. Julie Corelli (Philadelphia), Vicki Harding and Mike Temple (Detroit) and Jan Beyer (non-lawyer 'project manager' in Detroit) have a wealth of history in advising SBICs in the full range of regulatory matters. In addition, the firm's tax, ERISA and securities lawyers are highly experienced in all aspects of SBIC formation and operation.
- Depth of Knowledge. Establishing an SBIC requires extensive knowledge of partnership and corporate law, securities law, taxation (foreign and domestic) and ERISA laws, as well as in-depth knowledge of the SBIC Regulations. Lisa Petkun has provided SBIC tax advice for 25 years. Joe Del Raso formerly was the SEC attorney handling publicly traded business development companies. The firm has extensively researched the availability of Community Reinvestment Act credit for investments by financial institutions in SBICs as well as the interaction of state sponsored economic development programs with SBIC requirements.
- Washington Presence. Mike Staebler handles most of the day-to-day in person contacts with SBA and has an office in Washington, D.C. Doug Camitta has extensive experience in dealing with the staff of SBA's Investment Division and its attorneys.Pepper attorneys have strong relationships with all relevant members of SBA's legal staff, as well as with senior Investment Division officials.
- Working With Your Regular Counsel. The firm is equally happy to handle all aspects of your SBIC's formation and licensing, or to work with your regular counsel. Pepper Hamilton has excellent working relationships with many of the country's other leading law firms and regularly receives referrals from them.
- Cost Effective. Having seen "almost all of it" before, the firm is equipped to provide informed, experienced advice to assist you in "getting it right" the first time.
Fund Formation The firm assists prospective SBICs in structuring their funds and raising private capital. The firm has a national perspective and extensive experience in negotiating relationships between principal fund managers and between fund sponsors and limited partners.
Pepper Hamilton advises clients concerning all aspects of fund formation and management, including domestic and foreign tax structuring, ERISA and compliance with federal and state securities laws.
We represent SBICs in the full range of governance and operating issues. Governance issues include advice concerning the structure of the general partner and management services company and compensation issues pertaining to partners and employees; issues of management continuity; decision-making; and partner hiring and departures. Operating issues include investment structuring; permissible management fees charged to portfolio companies; over-line investing; “conflict of interest” issues between affiliated funds (including parent funds) and other affiliates; SBA reporting requirements and strategies; and distribution strategies. We provide virtually same-day turnaround on legal opinions required for draw requests.
Licensing Pepper Hamilton has represented more than 160 firms in obtaining licenses as SBICs or SSBICs. Of these, more than 150 have received their licenses since August 1, 1994. In addition, the firm represents numerous management teams in the process of fundraising or obtaining a license. These firms are located throughout the United States; are structured as limited partnerships, corporations and limited liability companies; and have investors that include large public and private pension funds, state and local governmental agencies, banks and bank holding companies, tax exempt entities, individuals, and foreign individuals and entities.
Regulatory Advice The firm provides ongoing regulatory advice to licensed SBICs covering the full range of SBA regulatory compliance.
Fund Investment Activities Pepper Hamilton handles investments for SBICs, venture capital and buy-out firms throughout the United States. Our clients have invested at all stages of development of portfolio companies including seed and early stage, growth, mezzanine and buy-outs. The firm's clients have invested across all industry sectors including biotechnology, health, telecommunications, information technology, manufacturing, distribution, outsourcing, publishing and retail. Portfolio companies are privately held and publicly traded. Pepper Hamilton has an extensive merger and acquisition practice and is accustomed to representing buy-out as well as venture capital investors.
Counsel to Portfolio Companies Pepper Hamilton is experienced in all aspects of representing portfolio companies. We help companies grow from their initial incorporation and negotiation of their initial small contracts into large multi-national businesses. We advise growing businesses on incentive compensation plans, protection of intellectual property, personnel matters, securities compliance, relationships with suppliers and customers, banking and other financial relationships, and creditor rights matters. Pepper Hamilton has a large securities practice that handles 15-20 public offerings annually on behalf of issuers and underwriters.
Support of the SBIC Industry The firm has been a member of the National Association of Small Business Investment Companies (NASBIC) since 1981, and has provided extensive support and counsel to the industry. Pepper Hamilton attorneys work closely with NASBIC and the U.S. Small Business Administration to assist in developing regulations and SBA policies implementing the "new" SBIC program which began in 1992. The firm helped develop several of the forms used by SBA, including the model partnership and limited liability company annexes and the capital certificate. For many years, Pepper lawyers have written the tax and securities law sections of NASBIC's "Guide to the SBIC Regulations." Pepper created the basic form of "Class A-Class B" drop down fund in 1996, and has since created well over 30 funds using that structure.
Pepper Hamilton has sponsored seminars on the formation and operation of SBICs. Our lawyers frequently speak concerning the new SBIC program at industry meetings and the NASBIC Venture Capital Institute, as well as at gatherings of accountants, lawyers, development officials, venture capitalists, and businesspeople. Firm attorneys regularly meet with NASBIC and SBA officials concerning industry policies and practices.
Interested in more information on SBICs? Read
"An Overview of the Small Business Investment Company Program".
