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General Partner Transfers: The Buyer’s View

Markets for General Partner Transfers During Compliance Period. Basil Rallis Tax Credit Property Disposition: A New Generation of Rights, Obligations and Opportunities Through Year 15 and Beyond October 11 & 12, 2007. General Partner Transfers: The Buyer’s View.

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General Partner Transfers: The Buyer’s View

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  1. Markets for General Partner Transfers During Compliance Period Basil RallisTax Credit Property Disposition:A New Generation of Rights, Obligations and OpportunitiesThrough Year 15 and BeyondOctober 11 & 12, 2007 General Partner Transfers: The Buyer’s View

  2. L.P. Initiated--LP has removed original GP and is selling the GP rights • Positives • Single point of negotiation • Same goal of moving towards a closing • Rarely involved personnel issues

  3. L.P. Initiated Continued • Negatives • Often challenged properties are paired with performing…the Good, the Bad and the Ugly…dealing with negative capital accounts, and foreclosure risk. • Non-affiliated, or Non-profit partners that need to consent, may feel cut out of the transaction.

  4. L.P. Initiated Continued • Mechanics • Fairly straight forward accounting issues, without many surprises. • LP understands the tax and accounting issues.

  5. G.P. Initiated-- Successful GP is looking to sell their various economic interests • Positives – It’s a deal! That is Always A Plus… • Usually represented by professional who can manage the process and expectations…It is not closing in 30 days! • Some opportunities to add talented staff to your organization

  6. G.P. Initiated Continued • Negatives – The Consent Process… • The LP approval – The need to improve upon their current position, and settle up with the departing GP. • Does The LP Approval change the economics for the buyer, or seller? How to “adjust” and not renegotiate. • Pushing on a string – No control on timing; motivating the required consenting parties.

  7. G.P. Initiated Continued • Mechanics – Not So Straight Forward… • Price allocations – Hot Assets (deferred developer fee) GP Interests, receivables. • Reinterpreting the Partnership Agreement; Are the receivables, really capital? • Cleansing the Balance Sheet – Proration of expenses, capex requirements – whose dime? • Controlling slippage – Declining operations associated with protracted closings

  8. Markets for General Partner Transfers During Compliance Period General Partner Transfers: The Buyer’s View Basil RallisDirectorCascade Affordable HousingTax Credit Property Disposition:A New Generation of Rights, Obligations and OpportunitiesThrough Year 15 and BeyondOctober 11 & 12, 2007

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