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Private Equity

Contrary to real estate, in which investors purchase homes and commercial properties, which they Data Room Storage then sell for profit within several years Private equity invests capital in large companies. This can lead to a higher ceiling of investment returns as the profits from the business are distributed over all investors who invested in the fund. This is what makes the business so profitable for private equity firms that make an income from their fund management fees along with carried interest and an element of each deal’s profit.

As new managers enter the market, they face an uphill struggle to raise an entire fund since LPs are sceptical about their performance and have trimmed their allocations. However the success of fundraising relies on planning and preparation. Before embarking on a fundraising journey, GPs need to know what they need to do to reach their target levels of committed capital. Fundraising is an exercise in momentum. They should also be clear about the sweeteners they are willing to offer like scale discounts as well as early bird benefits for first-movers.

Many PE firms employ placement agents to connect with LPs and to promote their funds. These professionals receive a fee based on a bargained amount that is raised by the fund. As a result, it is important for GPs to evaluate their internal investor relations team’s capabilities prior to enlisting the assistance of a placement agent.