Private Equity’s ‘Fourth Exit’ Crimped by SEC Plan, Lawyers Say

Investment lawyers worry the Securities and Exchange Commission will soon finalize a rule that would raise prices for a private equity alternative to sales and IPOs, making the tool less attractive to use.

The proposal would require fairness opinions before investors create so-called continuation funds. The funds let investors hold assets longer than anticipated as they await a better time for a sale or initial public offering.

Kirkland & Ellis often counsels clients to get fairness opinions, though an estimated $200,000 or $300,000 cost for one is not always worth it, especially for smaller funds, said Mark Boyagi, an investment ...