Regulatory AUM determines whether you qualify for the private fund adviser exemption. Calculating it wrong, in either direction, creates problems.
The Mistake
The most common errors are including unfunded commitments in RAUM (which overstates it, potentially pushing you above $150 million when you are actually below) or excluding certain fund vehicles from the calculation (which understates it, potentially masking that you have crossed the threshold).
Why It Happens
RAUM is not the same as committed capital, NAV, or AUM as used in marketing materials. Managers who are used to quoting their fund size as committed capital sometimes use that number on Form ADV, which is wrong. Others calculate RAUM for their main fund but forget to include SPVs or co-investment vehicles.
The Fix
Calculate RAUM as the fair market value of securities portfolios across all funds you advise. Exclude unfunded commitments. Include all vehicles. If you are near the $150 million threshold, track RAUM quarterly and use consistent valuation methodology.
How Capital Company Helps
Capital Company prepares and files Form D, blue sky filings, and Form ADV for funds on the platform. Schedule a demo to learn more.
This article is for informational purposes only and does not constitute legal advice. Consult qualified legal counsel for advice specific to your situation.