Private investment in public equity (PIPE) transactions can be a fast and cost-effective way for companies to raise capital relative to other options—and can present an attractive investment opportunity for private equity funds. However, sponsor-backed PIPEs can raise a number of key governance issues that need to be carefully negotiated. The governance rights afforded to the sponsor typically reflect the anticipated length and nature of the relationship between the sponsor and the issuer, as well as the size of the sponsor’s investment in the issuer, and may implicate SEC regulations, stock exchange rules and state laws. Below are nine key governance issues that regularly arise in sponsor-backed PIPEs.

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