HarbourVest Partners Backs Out Of Secondary Deal – Sources

HarbourVest Partners has backed out of a signed agreement to acquire a large limited partner stake on the secondary market, peHUB, the sister Web site of Buyouts, has learned.

According to multiple sources, the Boston-based firm is using a material adverse change (MAC) clause as one of its causes of action, having originally agreed to the transaction prior to the past month’s market volatility.

The sources said the crisis has created deep discounts in the secondary market, and that HarbourVest Partners was no longer willing to pay the pre-crisis price it had agreed to. The deal was all but done, waiting on only general partner approval to close, when HarbourVest pulled the plug. The firm declined to comment.

One source said the MAC was one of several reasons for HarbourVest to back out, including “other contingencies that would not be satisfied.” The source declined to specify, except to say that leverage accessibility was not a concern.

It’s unclear if HarbourVest Partners will be sued for backing out of the agreement. The seller so far has chosen not to file a lawsuit because of time constraints, one source said.

The scuttled deal isn’t expected to derail HarbourVest’s participation in the secondary market. The firm, which has an extensive track record as a fund of funds but also makes direct and secondary investments, is still “very active,” one source said, and will likely close a new deal on Friday.