Here, we’ll walk through the various stages of an investment fund’s life: Behind the Scenes: Form Fund Entities Before you can run the fund, you must form the fund. For a more detailed look at the fund formation process, see our investment fund formation timeline. Before you hold your first closing, you’ll need to: Once Continue reading
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European vs. American Waterfalls in Investment Funds
Here we’ll discuss European and American waterfalls in investment funds. A fund’s waterfall is a key deal term affecting both general partners (GPs) and limited partners (LPs). Note: The fund’s waterfall is not determined by the physical location of the fund. We routinely form US-based funds with European waterfalls. For background on how investment funds Continue reading
Investment Fund Side Letters – 10 Common Terms
Here we’ll discuss investment fund side letters. A side letter is an agreement between an investment fund sponsor and an investor giving the investor special rights or privileges. Note: This article will refer to “investors” (also known as LPs, limited partners, or investor members) and “sponsors” (also known as GPs, general partners, managing members, or Continue reading
How Are Investment Funds Structured?
Here we’ll review the basic structure of a typical investment fund. This setup works for funds of all asset classes (venture, real estate private equity, crypto, etc.). Both closed-end and open-end investment funds can use this structure. Here’s a link to the full-sized investment fund structure chart. Who are the parties in an investment fund? Continue reading
Investment Fund Closing Timeline – 10 Steps
Here, we’ll discuss a simplified roadmap to closing your first investment fund. Each fund is unique and this article provides only a high-level overview. You’ll work with your legal counsel every step of the way to ensure you raise your investment fund efficiently and successfully. The 10 steps are as follows: Here’s a link to Continue reading
Intro to SEC Reports for Public Companies: 10-K, 10-Q, and 8-K
Public companies enjoy greater access to capital and increased prestige. But it isn’t all sunshine and rainbows. Once a business officially becomes an SEC reporting company, it must start filing a variety of forms with the Securities and Exchange Commission (SEC). Here, we’ll tackle three essential SEC forms: 10-K, 10-Q, and 8-K. Annual Report on Continue reading
Syndication Series #005 – Real Estate Syndication Fees Explained
In our last syndication series article, we explored how real estate sponsors make money by splitting profits with investors. Here, we’ll discuss the other way syndicators earn income — fees. Fees vary widely from deal to deal, both in type and amount. Here you’ll learn how to evaluate some of the most common real estate Continue reading
The Difference Between a Member-Managed and a Manager-Managed LLC
LLCs are great for investors and small businesses because of their flexibility. One of the first steps to customizing your LLC is to determine whether you want it to be member-managed or manager-managed. Here, we’ll discuss the difference (and which management structure is best for your business). Option 1: Member-Managed LLC An LLC’s owners are Continue reading
How to Fix Your Business If You Haven’t Been Keeping Proper Records
Keeping careful records is essential to a well-run business. In fact, if your company is a disorganized mess that ignores corporate formalities, your future could be in jeopardy. Here, you’ll learn how to get things back on track if you haven’t been documenting your business as you should. What Happens If You Don’t Follow Corporate Continue reading
Syndication Series #004 – How Do Real Estate Syndications Split Profits?
Syndications are an attractive way to own real estate because investors can pool their money to purchase a larger property (or diversify across many properties). But how do the investors split the earnings from their investment? Here, you’ll learn everything you need to know about profits splits, preferred returns, waterfalls, and more. If you’re just Continue reading