Private Equity Fund Structure

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[@totianagarcia8491]

Finally, but what I would love is an explanation of this using Journal Entries😅

[@phonicstory]

Hey Peter, can you also show us the calculation of dividend distribution among GP and LP

[@Mis-AdventureCH]

Ok, so for clarity. The "GP LLC" sounds like it is merely an entity that assumes responsibility / power of attorney as per the PPM / LPA documents. It then recieves the distributions as per waterfall structure. Kind of a shell corporation to house the GP's interest and legal authority which then conduits the waterfall to ther checking account (say) when investments mature and produce dividennd, etc. The "Mgt Company LLC" entity is where the actual operational staff live. Humans, at desks. That's where the analysts sit, the FIN/ADMIN person sits, the GP who says yes or no to things, etc. Actual paychecks eminate from this entity. The admin assistant, the coffee maker, the CFO, COO, the Series 65 RIA person, etc, etc. In this model the GPs will actually be the incorporator of this entity and if required register with SEC as a RIA.

[@ericcartmansh]

Wow, quite the pivot for Bill Haider to go from SNL, Barry to now financial tutorials!

[@ASimpleModel]

Tried to get a job as Bill Hader's stunt double. But emotional stunts only. Like if he's getting yelled at in a scene. No dice. So financial tutorials it is... :)

[@LaddDentalGroup]

Fantastic overview!! Thanks for the content

[@hobissprite928]

I like how you address us as “team.” It makes me feel more engaged while learning. Thank you for the videos!

[@ASimpleModel]

Absolutely, glad you enjoy them. Certainly hope we're a team, otherwise its just me talking to a camera lens...

[@lmondrag83]

I am structuring a private equity fund, and I really needed all this vocab in English. Thanks so much, very clear all your explanations.

[@ASimpleModel]

Hi! The detailed notes that support this video are available as part of this curriculum: www.asimplemodel.com/financial-curriculum/private-equity/ Hope you find it useful!

[@R5410-b6d]

Peter - this was detailed but explained clearly

[@ASimpleModel]

Thanks for commenting! Much Appreciated.

[@ophie7565]

Very helpful intro, thank you!

[@zoranploscar8229]

Can this same approach be applied to real estate, as a debt fund using the property as collateral (non equity position)?

[@lucatintor4896]

Super video about PE introduction, very clear and simple to start.

[@ASimpleModel]

Thanks Luca! Should you be interested, you can find some more introductory information at the following link: www.asimplemodel.com/model/88/introduction-to-private-equity/how-private-equity-works/ (this also has notes available for download)

[@totallytrading3165]

awesome!!! Thank you for explaining

[@sumanthkumar8254]

Thanks for the video

[@dretrader1]

Hi, what is the porfolio fee range that the mgmt co charges the portfolio company?

[@yasaswiniprasad9213]

Hey Peter.. I was searching for material to know about private equity. Your video was the best and simple...

[@ASimpleModel]

Thank you for writing! Always find these comments motivating :)

[@mezzwrld2589]

really informative

[@ASimpleModel]

thanks!

[@amonifinau4048]

Thank you!

[@jaydeepsinh6429]

Very helpful.. Thankyou!

[@ASimpleModel]

Great to hear! Thanks!

[@failedkirby618]

This is well made

[@ASimpleModel]

Thank you!

[@harryfied47]

Great content, am working as a private equity fund accountant and we come across all these everyday.

[@ManuGupta]

Quick question: Deal Team, Accounting, Treasury etc all employees of the PE firm - they are part of Management Company, right? their salaries/bonuses should reflect in Management Company accounting.?

[@AplleNoob]

What is the difference in GP and Mgmt. Team? What are their tasks and responsibilities?

[@ASimpleModel]

Great question. I have a new video coming up on this topic. Should be posted in the next couple of weeks.

[@saniabhalla8148]

​@@ASimpleModelhas the video came on this topic?

[@daisydd1709]

How is the PE return va volatility comparing to S&P

[@missm2587]

Works in a hedge fund industry and recently starts exposing to the PE and these videos help me to understand Private Equity so much. Please continue making videos with great and knowledgeable contents! I love them!

[@SunilSingh-lz2vk]

Good Stuff.

[@ASimpleModel]

Thanks!

[@lavencompound]

A+ video

[@ASimpleModel]

Thank you!

[@p10rambo]

Is clearlake capital a private equity firm?

[@adon228]

This is a great video.

[@ASimpleModel]

Thanks!

[@sallyjohnson9504]

Well said

[@andihoxha6766]

Hi, Can you please give some literature on this topic, which goes more in detail. Thank you!

[@ASimpleModel]

Hi, you can find more detail on the website. Its part of the ASM+ PRO tier, which includes the Private Equity Training course: www.asimplemodel.com/financial-curriculum/private-equity hope that helps!

[@rightright6582]

Did u say that the GP makes 20% of the entire fund?

[@ASimpleModel]

Hi! This example might help clear it up: kzbin.info/www/bejne/bmGsm2iQhLybnZo (in this example its 20% of "profit") There's also a slower explanation here: www.asimplemodel.com/financial-curriculum/financial-modeling/leveraged-buyout/distribution-waterfall

[@TheMarmite09]

Wish you would slow down! Are you reading from a script? 😊

[@ASimpleModel]

Hi! The private equity training materials come with detailed PDF notes so that subscribers can move forward at their own pace :) I get a lot of comments about pace (too slow, too fast, etc), unfortunately really difficult to please everyone, but that's why we add the notes to the curriculum.

[@banihas22]

Thanks for the content Peter! Any plans to work on modelling content for project finance?

[@enricoquinzani7432]

Not exactly a PF course, but should help

[@ASimpleModel]

Hi Amir! Thanks for the comment. At the moment we are focused on private equity content. We should have new lessons up on the site within the next couple of weeks. I will keep this in mind as we explore new topics next. Thanks again!

[@laurenczin]

Great video!

[@ASimpleModel]

Thank you!!

[@chackothomas8929]

Peter, I love your videos! These are amazing! Please keep making these!

[@ASimpleModel]

Thanks Chacko! We are working on a full private equity series and hope to have it up soon!

[@startupsfedora639]

Amazing tutorials! Thank you so much

[@sandyk419]

I think mngt co and gp are same ? Am i right

[@ASimpleModel]

Great question! The management company is generally affiliated with the GP, but they are not the same entity. The GP will enter into a management agreement (or investment advisory agreement) with the management company. Under this agreement the fund pays the management company fees to employ the investment team, evaluate opportunities, manage the portfolio and manage all day-to-day operations. This is a common structure that allows the management company to work across multiple funds while still having a GP for each fund. It is not uncommon to see a private equity firm scale and raise new funds in the process. Over time the same management company could be affiliated with a handful of funds (GPs). The management company owns the firms branded assets and intellectual property, which include the name of the firm, the track record and any proprietary processes the firm has developed. This helps the management company raise new funds and allows it to build goodwill across funds.

[@ASimpleModel]

I really enjoyed your thought-provoking question, and thought it deserved a post. For future reference: www.asimplemodel.com/reference/141/private-equity-fund-structure-gp-and-management-company/ (summary available in my second comment on this thread)

[@bhavanagangishetty6907]

Great Peter..your videos are soo helpful.

[@ASimpleModel]

Thank you! Appreciate you taking the time to write.

[@cementman69]

Great, simple and to the point. would you please make one about hedge fund incubators, how are they established and taxed. thanks.

[@ASimpleModel]

thank you! we still have a ways to go on the private equity front, but once we are further along on that front we may move on to public equities and hedge funds.

[@luckieguru]

Peter- thanks for the Video, but you are very fast, it would be great to take notes if you are little slow....

[@ASimpleModel]

Hi Lakshman, many of the videos I post to KZbin are part of a curriculum available on ASimpleModel.com. These videos have typed notes available for download so that you can move at your own pace, but it is part of a subscription service (subscriber content: www.asimplemodel.com/model/103/introduction-to-private-equity/private-equity-fund-structure/). I try to keep prices low in an effort to eliminate cost as a deterrent to education. The PE Training curriculum is currently priced at $14 / month.

[@TheEveryDayAngel]

you can also slow down the playback speed ( example: from 1X to .5x)

[@girishbhatia6810]

Yes agreed with the comments. Be little slow to make the notes on the topic.

[@lynnjr.1842]

I couldn’t help but notice the books in the background. Is there any literature out there you can recommend us reading? Maybe do a video on books you find informative as well, lol?

[@ASimpleModel]

Love this idea! Will explore it. Thank you!

[@annapurnabonakurthi9174]

I would like to subscribe ASM.how it will help me for my career and interview.plz suggest.thanks

[@ASimpleModel]

Hi! Thanks for commenting. The content on ASM is designed to help with careers in investment banking and private equity. Please feel free to send me an email via the contact page if you have more specific questions!

[@SuperBuktus]

Hi Peter, love your content. What is the purpose of having the management company and the GP in separate entities?

[@ASimpleModel]

Thanks! And great question. This is a common structure that allows the management company (aka fund manager, investment advisor) to work across multiple funds while still having a GP for each fund. It is not uncommon to see a private equity firm scale and raise new funds in the process. Over time the same management company could be affiliated with a handful of funds (GPs). Hope that helps!

[@SuperBuktus]

@@ASimpleModel Great answer! Much appreciated =)

[@leefunk]

nice work! Thank you so much.

[@ASimpleModel]

Thanks for commenting! Glad you enjoyed it.

[@ifcastillo7414]

Nicely done! Thank you.

[@ASimpleModel]

Thanks for writing!

[@saiadithya1]

Hi, Peter In the video you have mentioned you will be providing notes, however I couldn't find any link for the P.E notes. Can you pls provide the link for the notes in description or as a reply to my comment.

[@ASimpleModel]

Hi Sai, most of the notes for this series are part of the Private Equity Training curriculum available at ASM (www.asimplemodel.com/model/10/introduction-to-private-equity/). The first two are free, but after that it requires a subscription. We strive to be the most affordable option available. A monthly subscription is currently $20 / month and can be cancelled at any time. Thanks for checking out the channel!

[@llarraify]

Thank you, this was very useful. And how does the interest/profit for the investors come into the picture (org chart, and flows)?

[@ASimpleModel]

thanks for the comment! while it doesn't cover management fees the video on the distribution waterfall covers in detail how investors benefit from upside (kzbin.info/www/bejne/eHyrkIpoh9qHrs0) I am working on something for the fees as well :)

[@llarraify]

@@ASimpleModel Thank you very much ❤

[@mym8330]

Slowly

[@miguelalvarado1440]

Thank you my friend. Now I see the whole picture!!! Well Explained!!!!

[@beyondhim...ididitsocanyou1651]

omg your look, is the a pitta me of a hedge fund manager

[@ASimpleModel]

Ha! Thank you(?) :)

[@sunnygadge350]

Mardi gras

[@ASimpleModel]

I definitely prefer mardi gras to private equity structures...

[@hecelolita1542]

Thank you!

[@ASimpleModel]

most welcome!