Corporate Parenthood: Private Equity Duties and Portfolio Company Rights
Sung Eun (Summer) Kim, Corporate Parenthood: Private Equity Duties and Portfolio Company Rights, 34 Rev. Banking & Fin. L. 317 (2014).
Firms use the labels of family relationships, such as parent companies, sister banks and brother-sister controlled groups. This article considers whether there are additional insights underlying such labels that could be portable to the corporate context, using the private equity (P-E) led leveraged buyout (LBO) as the understudy. By emphasizing ‘parenthood’ as an essential feature of the relationship between private equity owners and their portfolio companies, the analysis borrows from the rationales commonly relied upon in family law to balance parental duties and subsidiary rights. Exploring and emphasizing the role of private equity firms as parents motivates a shift in perspective which looks at these firms as inclusive (rather than extractive) institutions with a purpose and responsibility that extends to other members of their corporate families.