Losses and redemptions have combined of late to threaten the viability of many hedge funds managers, especially smaller and mid-sized managers.  In response to that threat, some hedge fund managers have sold their advisory businesses to larger entities.  While selling managers give up a degree of autonomy, they get (or hope to get) an offsetting amount of additional capital (from sale proceeds and new investor sources), operational resources, distribution reach and talent.  In the March 18, 2009 issue of the Hedge Fund Law Report, we explored in depth sales of hedge fund advisory businesses.  See “For Managers Facing Strong Headwinds, Sales of the Advisory Business Offer a Means of Preserving the Franchise While Avoiding Fund Liquidations,” Hedge Fund Law Report, Vol. 2, No. 11 (Mar. 18, 2009).  A related type of transaction – less common in the hedge fund industry and hence less frequently discussed – involves mergers of hedge funds themselves.  Hedge fund mergers have similar goals to sales of advisory businesses (namely, avoiding a wind down and preserving a going concern), but implicate different legal, regulatory and operational considerations.  We explore various aspects of hedge fund mergers, including: investor consent requirements, opt-out rights, asset transfers, due diligence, valuation, treatment of side pockets, operational issues and talent retention.  We also describe a new strategic alternative available to fund managers struggling with losses and redemptions.