Private Equity Fund Raising Deals

Private Equity Fund Raising Deals

Private Equity

In contrast to real estate, where investors purchase homes and commercial properties and then sell them at a profit after several years private equity invests capital into large companies. This can result in a higher investment ceiling because the profits of the business are shared amongst the investors who invested into the fund. This is what makes the industry so lucrative for private equity companies that make a profit from their fund management fees, carried interest and a portion of each deal’s profits.

As new managers enter the market, they will face an uphill struggle to raise an entire fund since LPs have been apprehensive of their performance and have trimmed their allocations. A successful fundraising effort is dependent on the planning and preparation. Before setting out on the road, GPs need to know how they can reach their goals of committed capital. Fundraising is an activity that builds momentum. They must also be clear about the sweeteners that they are willing to offer such as scale discount early bird discounts or first-movers.

Many PE firms use placement agents to connect with webpage LPs, and promote their funds. They are paid by a commission based on the bargained amount that is that the fund raises. Therefore, it is crucial that GPs evaluate their internal investor relations team before engaging a placement agent’s assistance.

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