The structural decisions behind your fund: entity types, GP and management company setup, Delaware formation, and fund vehicle selection.
Launching a fund involves more than raising capital. Before your first close, you need the right legal structure and investor-facing documents. A guide to fund formation from entity setup to closing your first investors.
Starting an SPV takes nine steps: secure the allocation, set the terms, choose the structure, form the entity, prepare the documents, onboard investors, close, file Form D, and keep up with annual obligations. Here is what each involves.
Your choice of investment vehicle shapes your economics, investor relationships, and regulatory obligations. A practical guide to choosing between a traditional fund and an SPV.
A continuation vehicle transfers a portfolio company from an existing fund into a new vehicle, giving existing LPs a choice between taking liquidity at a market price or rolling into the new structure for continued exposure.
A continuation vehicle requires its own legal entity structure, separate from the original fund. The choice of entity affects governance, tax treatment, investor eligibility, and ongoing administration.
The difference between selling and rolling in a continuation vehicle can result in materially different after-tax outcomes, depending on LP tax status, transaction structure, and the entities involved.
When a continuation vehicle transaction is announced, every existing LP faces a decision: take cash at the transaction price or roll into the new vehicle for continued exposure to the asset.
Carry treatment, fee structure, GP commitment, and hurdle rates determine how value is shared between the GP, rolling LPs, and new investors in a continuation vehicle.
Continuation vehicle transactions place the GP on both sides of the deal. That dual role creates conflicts around pricing, economics, and information that require careful process management.
The first structural decision in a continuation vehicle transaction is whether to transfer a single portfolio company or multiple assets into the new vehicle. Single-asset CVs dominate transaction volume, but multi-asset structures serve real purposes.
A fund-of-funds invests in other funds rather than directly in companies or assets. That creates layered regulatory requirements including look-through counting rules.
A warehouse vehicle holds pre-fund investments until the fund closes. Rolling those investments into the fund requires careful structuring to avoid tax and valuation issues.
A master-feeder structure consolidates investment activity in one vehicle while accepting capital through multiple feeders. When it makes sense and when simpler options work.
Parallel funds and feeder structures let you accept capital from different investor types. Understanding when you need them prevents over-engineering your fund.
Co-investment vehicles let LPs invest alongside your fund in specific deals. Structuring them correctly avoids regulatory and operational problems.
A series LLC lets you run multiple SPVs under one umbrella entity. That simplifies formation but introduces complexity elsewhere.
Every private fund has at least two entities. Most have three. Understanding which entity does what prevents structural mistakes.
Most private funds use a Delaware LP, but LLCs offer flexibility for smaller or simpler structures. How to choose the right entity.
Capital Company handles formation, compliance filings, and back-office operations so you can focus on investing.