1202015 Informal Interpretation

Michael Verne

– Refer to MV comments in BOLD.  KW concurs.


Sent: Tuesday, February 28, 201210:52 AM
To: Verne,B. Michael
Cc: (Redacted)
Subject: Question on Associate Analysis

Attachments: Graph.pdf

Hi, Mike-

(Redacted) and I have another question regardingthe associate analysis. The attached chart is a sanitized version of thestructure for Fund I in connection with a current acquisition for one of ourprivate equity clients. We have highlighted in yellow the entities that aremost important to the analysis.

The acquiring person inthis transaction is Fund III (not shown on the chart). We have analyzed theassociates for Fund III and determined that among Fund Ill's associates areFund II, the common ultimate general partner of both Fund III and Fund II("Fund II/III Ultimate GP"), and Y, an individual who holds 100% ofthe outstanding voting securities of the Fund II/III Ultimate GP.

As you can see from theattached chart, Y similarly holds 100% of the membership interests of LLC/Y.LLC/Y is the general partner of LP1, which is the general partner of Fund I.Thus, LLC/Y, LP1 and Fund I are all associates of Fund III.

Fund I is controlled byLLC/X, which holds in excess of 50% of the partnership interests in Fund I.LLC/X is controlled by X, which holds in excess of 50% of the membershipinterests in LLC/X. X is its own UPE. (X also holds 40% of the partnershipinterests in LP1, but that should not affect the associate analysis.) Pleasenote that the investment decisions for Fund I are made by the investmentcommittee of LP1--not by X or any of X's controlled entities.

(1) Is X consideredto be an associate of Fund III by virtue of its indirect control of Fund I? (MV YES)

(2) If so,will we need to perform the analysis of what other entities X directly orindirectly manages or controls? (MV YES)

Please note that X is anentity independent of Funds II and Funds III and over which Y and Funds II andIII have j ~50 control, so it may be difficult to get the information onX's controlled and minority investments for purposes of determining a NAICscode overlap with the target.

(3) If we need to reportcontrolled and minority investments of X, may we do so on information andbelief? (MV YES)

(refer toimage file for diagram/graph)

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