Comments on: Structure of a private equity fund http://www.theprivateequiteer.com/structure-of-a-private-equity-fund/ A vignette into the aberrant thoughts of a private equiteer Sat, 28 Aug 2010 13:18:38 +0000 hourly 1 http://wordpress.org/?v=3.0.1 By: The Private Equiteer http://www.theprivateequiteer.com/structure-of-a-private-equity-fund/comment-page-1/#comment-7152 The Private Equiteer Mon, 25 Jan 2010 06:19:40 +0000 http://theprivateequiteer.com/?p=522#comment-7152 Thanks for the kind words luojieming.<br><br>I suspect the corporate laws in our respective countries are different. However, the typical PE fund is structured first and foremost to provide flow-through taxation to investors. So while an LLC in your country may avoid double taxation, it may lead to taxing certain investors above their marginal rate. This would be the case for retired investors on lower rates, overseas investors with tax treaty agreements, etc.<br><br>Sorry I couldn't be more help, but this isn't one of my strong areas. Maybe another reader can help? Thanks for the kind words luojieming.

I suspect the corporate laws in our respective countries are different. However, the typical PE fund is structured first and foremost to provide flow-through taxation to investors. So while an LLC in your country may avoid double taxation, it may lead to taxing certain investors above their marginal rate. This would be the case for retired investors on lower rates, overseas investors with tax treaty agreements, etc.

Sorry I couldn't be more help, but this isn't one of my strong areas. Maybe another reader can help?

]]> By: luojieming http://www.theprivateequiteer.com/structure-of-a-private-equity-fund/comment-page-1/#comment-7150 luojieming Sun, 24 Jan 2010 06:36:55 +0000 http://theprivateequiteer.com/?p=522#comment-7150 Thanks for the great post; it was informative and concise. One question I have is why does the limited partnership seem to be the vehicle of choice for private equity funds? As I understand it, the general partner in a limited partnership has unlimited liability, and generally shields its other business lines by making the GP an isolated LLC. Why not simply structure the Fund as an LLC? An LLC should avoid the double taxation issue, but would it have an impact on the ability to treat the carry as long term capital gains? Also, what are some other structures that are typically used if not a limited partnership? Thanks for the great post; it was informative and concise. One question I have is why does the limited partnership seem to be the vehicle of choice for private equity funds? As I understand it, the general partner in a limited partnership has unlimited liability, and generally shields its other business lines by making the GP an isolated LLC. Why not simply structure the Fund as an LLC? An LLC should avoid the double taxation issue, but would it have an impact on the ability to treat the carry as long term capital gains? Also, what are some other structures that are typically used if not a limited partnership?

]]> By: In it for more than the carry | The Private Equiteer http://www.theprivateequiteer.com/structure-of-a-private-equity-fund/comment-page-1/#comment-3405 In it for more than the carry | The Private Equiteer Thu, 04 Jun 2009 02:36:58 +0000 http://theprivateequiteer.com/?p=522#comment-3405 [...] look at a very simple example. Your firm runs a $100m fund with a 20% carry entitlement. There are four founding executives and eight investment executives. [...] [...] look at a very simple example. Your firm runs a $100m fund with a 20% carry entitlement. There are four founding executives and eight investment executives. [...]

]]>