Private Equity Portfolio Company Status Risk Factor

Summary

These template risk factors discuss potential risks that may arise from a company’s status as a private equity portfolio company. When a private equity firm (i.e., the “sponsor”), controls a company that is subject to the reporting requirements of the Securities Exchange Act of 1934, as amended (Exchange Act), the company should consider including risk factors that address this relationship in its periodic reports filed under the Exchange Act. This template includes practical guidance and drafting notes. These template risk factors address the following potential risks: (1) the “controlled” company governance exemption under the rules of the New York Stock Exchange (NYSE) and the Nasdaq Stock Market (Nasdaq), (2) the sponsor’s control of the board of directors and business activities, (3) takeover defenses that assist the sponsor in preventing outside control, and (4) conflicts of interest that may arise between the sponsor and the company. These risk factors assume that a company is ...