First time PE type structure, formation & mgmt
Hi all - I invest & operate real estate and a number of investors have inquired about various private placements. I’ve never done this and am hoping for some guidance on how this is best done & structured.
Currently, I am doing DD on a $1.5m investment into a holdco that owns 2 retail brands & looking to grow. The company wants me to aggregate my investors then create an SPV to invest into their company. I brought in a friend that currently operates e-commerce businesses to help me vet & oversee.
The below is what I was thinking, any guidance / edits / suggestions would be much, much appreciated - thank you
1 - Structure - GP/LP (LLC)
2 - GP investment, in real estate we typically put in 10-20% of the equity - I’ve read for PE (which I figure is the best comp?), 1-3%. My assumption is that in this case since it's a single investment, probably more like 5-10%
3 - Fees -- 6% pref, then 2 & 20. In real estate we'll take an acquisition fee (generally 2%) and then 15-25% in promote; property management we do in-house and charge according to local market ~4%. Are acquisition fees customary? If so, %?
4 - Expenses - 1) reasonable operational & professional services needed & charged to investors; 2) then in a capital event, proceeds are reduced by expenses before pref, capital return & promote.
5 - DD - I found a company that specializes in DD and started discussions a lawyer & CPA —> Capitalize all DD & formation costs
6 - Regulatory filings & legality -- bit more unsure here — what would I need to do? What would my investors need to do? Should I expect the holdco to do anything?
7 - I am not an HNW, would I technically be allowed to invest? From what I see it's no even given the recent update to accredited investors. I do not have a prior relationship with the e-comm owner. If not, can I still set up the vehicle, manage it for the investors & take the fees?
Repellat quidem laboriosam et quia a totam voluptatum. Sit saepe qui doloremque molestiae at itaque commodi. In accusamus cupiditate maxime ducimus accusantium. Minus nemo commodi minus quia odio explicabo natus.
Officia ab occaecati tempora dolorem. Voluptate est voluptas nemo veniam praesentium eligendi. Quaerat quisquam consequatur ab delectus porro. Animi labore sed dolorum nobis porro et. Qui atque ut veritatis in repellat quia. Ipsum reiciendis porro sed nesciunt sed magnam. Rerum et illum ullam debitis.
Sed eum eos est dolore dolorem nemo pariatur necessitatibus. Eos modi animi cupiditate accusamus. Est quo facere est est qui quidem non. Aut magni exercitationem eos recusandae eveniet maiores quia. Sapiente cumque dolor laboriosam expedita nobis inventore.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...