Equity Fund Placement Agent by syu77016

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									   Financial Research
Effectively Administrating Private
           Equity Funds
          June 14, 2007
                  Your Panel
• Gerry Esposito
  – Chief Financial Officer, Newbury Partners LLC
• Kathleen Hayes
  – CFO / Controller, AMCI Capital LP
• Robert Liptak
  – Managing Director, Clarus Ventures
• Richard Morris
  – Partner, Herrick, Feinstein LLP
• Fund Type (classic private equity v. new)
• Resources
    – Placement Agent
    – Ability to add value
•   Costs
•   Overspecialization
•   Side Letters
•   Effects on Marketing
    – First time fund
    – Management Team
    – Infrastructure
• Effects on Returns
• Due Diligence Information
       Outsourcing / Consultants
•   When does it make sense?
•   When is it a bad choice?
•   Due Diligence
•   Account Representative turnover
•   Fund Expense – Firm Expense
           Service Provider Fees
•   Flat Fee Deals
•   Big 4, tier two firms or regional accounting or legal firms?
•   Broken Deal Expenses - How are they handled?
•   Legal and Accounting Fees
•   Organizational Expense Cap
•   Know Your Customer Rules
•   How to reach LPs via networking
•   Proper private placement memos
•   “Opt In” Adviser Act
•   Reports to LPs
 Information Technology Issues
• Choosing external IT consultants
• Building the proper network and infrastructure that
  provide flexibility and room for growth
• Disaster recovery
             Patriot Act Issues
• Bank relationships
• Due diligence relating to LP Investors
• Potential legal obligations
     Fact Patterns for Discussion
1.   A fund will have an initial raise from a limited number
     of investors, mostly “fund of funds”. One source is
     willing to provide a significant amount of initial capital if
     it can receive a portion of the “promote” payable to the
     fund manager.

2.   A fund has operated successfully during the last two
     years. With two years remaining for its “investment
     period” it wants to expand from its core investment
     strategy and invest in other strategies. The
     partnership agreement permits the general partner to
     expand the investment strategy but this fact was only
     briefly mentioned in the PPM.
3. A fund has lost its founder and Chairman (or
   other key investment manager) due to:
    •   SEC or other regulatory investigation.
    •   Retirement.
    •   “Split” with other investment managers to join
        another fund.
4.   A fund wants to outsource its accounting and other
     administrative functions to:
      • A new company without any proven track record
         (organized by former partners of major firms).
      • An affiliate of the founding member of the fund.
      • An “offshore” firm
5.   A fund is raising additional capital and will use
     projections in its PPM. The only financial information
     that will be provided to investors are audited financials
     and customary tax information.

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