Steps To Look Into While Setting Up Your Own Private Equity Firm

Private equity is a type of investment which has become very popular these days, in private equity people invest in private companies or publicly traded companies that turn into private ones subsequently, due to private transactions. The stakes in these companies are mostly free from rules and regulations of the federal securities and also the public market.  These firms are managed by a general partner and are funded by limited partners. Growth equity firms, leveraged buyout firms and venture capitals are all different kinds of private equity funds. Today there are many successful private equity firms, but a lot of planning and assessing goes into creating one’s own private equity firm, below are few steps and strategies that one should think about before venturing into this business :-





• DEFINE BUSINESS STRATEGY

Defining and outlining a business strategy is the most important and basic step, knowing and comparing your financial goals from other competitors and doing proper research about the market are some of the key steps that one should follow.

• SETUP

The second step is to write the business plans and strategies that one has come up with, which should include the cash flow that one is expecting, setting up the timeline of the funds, which are mostly around 10 years and general marketing plans about future investors and growth of the firm. Another important step includes establishing the firm and funds name, so all of these steps combined should be kept in mind.

• ESTABLISH INVESTORS

Now that the initial steps are in order, it’s time to think about the legal structure of the fund, which includes the general partner who has the right to decide the investments of the fund and the investors will be the limited partners, who don’t have the right to choose the companies which will be the part of the fund. The general partners bear any additional losses within the fund while the limited partners only incur losses which are of their own individual investment.
These are some of the steps that one should follow to setup his or her own private equity firm. India is an attractive market these days for young investors.

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