Private Equity Fund Structure Explained
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- Опубликовано: 11 июн 2020
- 🔥 LOOKING FOR HELP LAUNCHING YOUR FUND? 🔥
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ABOUT BRIDGER PENNINGTON
Bridger Pennington is the founder of 2 investment funds that have done over 217 deals in the last 4 years. Additionally, he currently manages an 8 figure hedge fund Ugly Unicorn and is a strategic advisor to 8 portfolio funds.
He has started helping others launch their own funds through Fund Launch, an online program with over 60,000 students designed to help them start investment funds without working on Wall Street or having an Ivy League degree. Last year they launched 130 student funds, and have 12 student funds over $100 million.
Bridger has spoken on stage to thousands of people across the United States and is determined to help entrepreneurs scale their businesses through launching their own funds.
DISCLAIMER: This is NOT financial or legal advice. Fund Launch’s experiences with using a fund strategy are unique to them. You should not consume this content with the expectation that you will have similar or the same results. All fund projects are subject to multiple variables and risks that make it impossible to predict success. Since we cannot predict success or provide you with information on what an average customer experience is by creating a fund, you should assume you will not have the same type of success or any success at all. We encourage you to seek out advice from other qualified professionals for advice on setting up your particular fund.
Learn More About Bridger & Fund Launch:
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Private equity sounds like a mechanism that extracts the most amount of value from a business, and transfers that wealth to the few general partners.
There are strategies that could be put in place for solid gains regardless of economy situation, but such execution is usually carried out by an investment specialist
I've been in touch with a financial analyst ever since I started investing. Knowing today's culture The challenge is knowing when to purchase or sell when investing in trending stocks, which is pretty simple. On my portfolio, which has grown over $900k in a little over a year, my adviser chooses entry and exit orders
Mind if I ask you to recommend this particular coach you using their service? Seems you've figured it all out.
Just research the name Angela Lynn Shilling. You’d find necessary details to work with a correspondence to set up an appointment.
I appreciate it. After searching her name online and reviewing her credentials, I'm quite impressed. I've contacted her as I could use all the help I can get. A call has been scheduled.
As someone who's audited Private Equity clients - i can confirm this is all you need to understand how PE fund works, great video and very simply put!
Which firm do you work for?
Charlie Munger explained very well how that scam works.
@@barryallen6927 lmao true
relax @@barryallen6927
Thank you for this bro!!!!💪🏾 just started workin in field of finance over 2 years now this was a massive help
Hey man, this is really a cool way to explain the concept. I got it all injected now. I'm all in for your upcoming videos. Could you please differentiate between the IRA and the GP??. Please tell me if there are playlists already on private equity and Hedge funds... Thank you.
5 minutes in and I can’t turn off this video, you just earned yourself a like and subscribe
Thanks Pat! Hope to keep it coming
Really high quality content! Could you make a video on how large your first fund be? Thanks!
OMG. BRIDGER. I never fully understood how things worked in PE and in general Real Estate Industry but as a visual learner, this is so much easier to digest. I will be coming back to review later on. Amazing video! thanks!!
May we get more in depth with LPA and PPM?
Subscribed right away, loved the content
Working for a third party administrator in the AI field, your videos are helpful and pull back the curtain.
Buddy you were good enough to explain in a nut shell about the private equity concept however I liked it and appreciate your hard work well done on 12.15 minutes video
& You have gained me as new subscriber usually I don’t subscribe any channel but I did subscribed now hope to see and take more knowledge on various other topics from you.
Keep doing great work.
Thanks & regards,
Arshad
I love your presentations . We are a family with several commercial properties or residential. We haven’t scaled . Your program could change that .
Thanks for these videos, I’ve been interested in learning about PE and the veterinary practice world
Glad it was helpful!
SUCH a great video man! I rarely subscribe to channels. Just did with yours. Excited to go through more of your content!
Thanks so much! I'm the same way so I appreciate it!
Love this. Comprehensive explanation. You got a new subscriber dude! Thanks alot!
Thanks for the sub! Really appreciate it👊
This is great work! Would be good to get videos on pass through and parallel entities and why they are structured.
Yeah even I want to lear about that. Please make a video.
hey I do taxes for Private equity partnerships, structuring is usually done with tax issues in mind. Parallel entities in particular are set up for tax issues, so usually one will be a foreign corp and one will be a domestic partnership. The foreign corp will hold all the tax exempt and foreign investors to block ECI and UBTI, inorder to reduce any tax filing requirements for the LPs. The domestic partnership will hold all the US partners that are nto tax exept and dont need to be blocked.
I am so inspired thank you so much for sharing this knowledge you have no idea how much you have empowered me thank you and good luck in all your endeavors!
This is brilliantly explained! As opposed to a lot of video's talking about PE. Thank you!
i love you man, I a newbie to PE...and finally understand how it works after watch ur video!!!
Great video Thank you for making this concept easy to understand!
I find your videos very helpful. Could you please make one for vintage structure in PE funds and also about equaliation payments?
Specifically what do you want me to cover in vintage structure?
@@bridger_pennington I was thinking about the explanation of vintage idea in the fund in general, how such funds work. I deal with vintage funds, however it is not really clear to me why vintage years exists, why fund cannot have ore closes and call all commitments quicker instead of having vintage years. Why is this structure good, why is so important that vintages need to be called in an order 1,2,3...
Nicely explained! thanks Bridger
Bro you should have over 1M Sub this is crazy info. I just raised cap for a fix and flip and wanted to see how I could take that to the next level and this, this is it.
Agreed! He’s amazing
Nice video! Thx for explaining the PE structure
Hi Bridger.. A very insightful video I must say.. Can you please tell us about investor allocation in private equity funds
Great content ! What’s the suggested performance fee given there is no management fee?
You are helping a lot of people. Thanks a lot
Excellent overview of the concept. I wonder does this apply only to the US markets or if you're investing in a fund abroad, say in Bangkok, under different jurisdictions, will we see changes to this process generally? BTW, I think you misspelled your name in the "About" section. :)
Great value within a great format. Kudos my friend. 🎉
BIG THANKS! YOUR EFFORTS LIVE ON..
clear and brief explanation, learned a lot from a short discussion
High quality info thanks!
Could you please explain the Master feeder structure and the use of blocker funds in private equity...
Awesome explanation - really clear
Thanks for making these videos buddy
Ah! Thank you so much. I landed an internship somehow for a private equity fund & I'm freaking out because I want to do a good job
I’m a freshman in college. What was your major/work experience?
I leaned a lot. Your dad is a good teacher.
Heard the first 1:27, and I immediately subscribed, Love the transparency.
Really appreciate it👊
Great content content, I started to do real estate and PE is on my goal list, thank you
Awesome keep me posted on how it goes!
This is excellent!
Super informative video! I’m a PF tax intern and was totally lost on how to explain what I am doing to other people haha
Amazing video, thanks brother!
Glad you liked it!👊
Bro your videos are gold!
Great video, thank you!
Hi Bridger, thanks so much for the great advice. Question, is it possible to be a Managing Partner while also be a limited partner to put some extra money to work for you?
Best
G
How do you license the fund, such as Llc or S corp and etc ?
Truly thank you for diving into this Bridger, that's whatsup!
As a PE fund professional, I like this!
This is a great vid. The companies the GP goes and buys are typically private companies or public companies that they would then have to de-list from the exchange, correct?
Un private Equity you only could real with private companies, oro you could take a listed company and take It back yo privately held and de-list It🤷🏻♂️🥴, thus come the name "Private" not publicly traded
Great Video!...do you deposit investor funds into individual bank accounts or do you pool all the funds in to one account and track via accounting backoffice
They pool the money on Limited partnership bank account not yours
Dope content keep it coming!
More to come!
I love your videos, thanks a lot!❤❤❤
No problem!
thank you!
Wow, this is an awesome video! Can you please also make a video on Secondaries?
Hey , you have got a new subscriber from India🇮🇳
Thanks, so helpful!
no problem!
Can’t believe a dude knows Victoria’s Secret more than I do. Lol 😂
Hahah I was thinking the same
thank you for inspiring info
Love the video!
Thank you!!
Good content. One point, if you're offering is structured as a Red D (Accredited Investors only) or Reg S (foreign investor), no licensing is required if the issuer of the Fund (GP) is receiving the fees, including investor procurement fees (1-5%).
Where can I verify this info?
@@geelim6999 I can't verify his info, but SEC.gov is a good place to start. They go into some detail on this.
superb explanation!
Def worth it! Appreciate it
Do you have to charge both the fees? So helpfull
Thanks Bridger for the great explanation. Check out our latest video on distribution waterfall calculation - ruclips.net/video/tEt3tINm3Hs/видео.html
Useful!!! thanks
bridger question: wouldnt the RIA advise the GP instead of the LP? , cuz the GP is making the decision of what or what not to buy for the benefit of the LP's???...thx
Can you talk about the best ways to approach a PE fund in order to get on their contact list and become notified once they begin the sell of one of their companies that you are interested in purchasing
Great content!!!
Very well explained 🤙🤙
Great work my friend.....
This was Great information about Private Equity Fund. I will share this with other who do not know how a Private Equity Fund is Set up like the BIBLE you set the RULES. Thank you so Much Bridger Pennington! I'll REPLAY!!!
Thank you..
Thanks Dude!!!
Amazing video Bridger
Thank you!
super helpful thanks
No problem!
Just want I needed. Thanks.
You are a great tutor. I will pick you as my mentor if you don't mind. I am ready to pay the appretenship fee.
Like and subed, Bridger, I got 2 questions
- What's the relationship between IRA and GP ? Are you the GP of your fund?
- If you are only charging performance fees, how do you fund the expense of legal/accountant fees up front?
There’s management fee for operations
I think you meant RIA in your question, So since it hasn't been answered yet, I will take a stab:
1) The RIA is an investment advisory expert, and is many times, but not always, a division of the GP sponsor. So as an example, a private equity fund "ABC Partners" will have a subsidiary called "ABC Asset Management" that is registered with the SEC, and requires licensure for its representatives. This asset management subsidiary evaluates the investment opportunity set (deal flow) and does the screening and to due diligence to recommend candidates to enter the limited partnership. There is an investment committee for the GP (which may include, But it's not required to include, members of the asset management arm as well as the GPs). If the GP has significant knowledge of a space where they can source and due diligence the deals themselves, they don't necessarily need an RIA if they are offering to very specific types of clients (read: Qualified Purchasers), however, it is common practice to have an RIA participate (often they will pay them a subadvisory fee and allow participation alongside the GP), especially as more strategies include opportunistic sleeves that require niche domain expertise I can be difficult to build in-house. Also, in addition to domain expertise, they also are approached with far more deal flow and have many more opportunities to evaluate for inclusion. Small fund managers often don't get a seat at the table for many lucrative deals unless they have an established player sitting at the table on their behalf (the RIA). This is especially true in GP-led transactions which are becoming a larger part of market deal flow.
2) Usually, a GP will seed a strategy with its own money and handle some initial expenses. They can also implement credit lines to help pay for these in the near term. Legal, accounting, and other operational expenses are higher in the beginning of a fund's life, as there are fewer LPs to spread the cost across. They are covered under either management fees or other accrued expenses. Often, they are subject to a cap on expenses for LPs, but they are still paid and a meaningful contributor to the depth of the J-Curve. Your performance fees should be based on net performance, so an 8% pref with total legal/admin/ops/management cost of 1.1% would need a 9.1% gross IRR to start collecting GP catch-up and/or carry. These are round numbers, and the calculation can be a bit different depending on if you are doing deal-by-deal or fund-as-a-whole performance calculation.
@@InvestorMattU Thanks for the excellent insights Matthew
Bro this is gold 💪💪
Wow what a informative video
Cheers
Thank you
No problem👊
Bridger, great video. In your example with VicSec & Geico, is there an LPA per company that defines the LPs %? for example, if LP#1 wants to invest into VicSec but not Geico, do they have that option?
cool video. thanks!
Subscribed !!
Thanks!
Well done Penn...!
hey Bridger, Thanks a lot for this great and uniq content!
I have a Q about private equity fund.
I am a pretty good trader\investor, and I have been managing my money pretty well.
How can I become a PRO and and legally raise a fund ?
I know that I can concidering my trading\investing skills, do I need to study anything?
or maby have a degree ?BA? finance?economy ? anything?
THANKS ALOT!
Can the RIA and the GP be the same person or SPE? Most videos say the management fee goes to the GP for the running of the fund.
So yes, you can be an owner of both the RIA and GP. People will say the mgmt fee goes to the GP because they assume they're the same entity when in reality they're usually separated.
How and who establishes the projected value in order to have equity?
Great work
Great video
Thanks for the visit
Best 12:15 minute of my life.
I’m gonna watch all your videos but I definitely want to dig into this further.
Do I just start an LLC? Do I start to LLCs??
How do I set my Bible up??
I have a Lot of questions.
I want to make sure I’m studying the right thing!
You said you got too many investors! Maybe you can connect me with some of the ones you can’t use Once I understand the structure and mechanics Of everything A little better
Hey Franky, a ton of great questions. You can book a free call with one of our fund coaches and ask as many questions as you want here: www.fundlaunchsecrets.com/15min-gameplan?sl=yt
Does a PE fund has only one or multiple GP?
How can they ensure that value will be created to the purchased company?
Yes, so my Dad's funds have around 11 GPs and 107 limited partnerships. They then all roll up to one master entity and board. They'll incentives different leaders by giving them equity in different GP's under the same umbrella
Excellent
Are you counting in acquisition fees, in real estate construction fees, and disposition fees?
By the way, definitely worth it to get that series 65.
Why?
How is the liability of the LPs determined? Is that written in the limited Partner Agreement also? So if the LP who puts in 4%, is his liability (if they get sued) limited to 4% of whatever they are sued for? Thanks.
Top class !!
is RIA part of GP? And you said the GP are paid using the Performance Fee. But Perf fee is variable right? As far as i know in the projects that i have worked, GP is given fixed 2% to manage the fund. Am i missing some thing?
The RIA is a separate entity from the GP and collects the management fees, they're typically owned by the same people
great video
So if you create such a fund, you would want to get that 2% management fee to yourself.
And you are saying that instead of getting that 2% yourself as a manager, you hire some RIA and he gets all those 2%?
That is interesting because most people though that it goes to the fund creator/manager, not some hired advisor