It's critical that you determine the purpose of each investment.
For example, is the aim of the investment to grow capital for mergers and acquisitions activity?
Here are several steps managers should follow to launch a private equity fund.
First, outline your business strategy and differentiate your financial plan from those of competitors and benchmarks.
Today's many successful private equity firms include Blackstone Group, Apollo Management, TPG Capital, Goldman Sachs Capital Partners, and Carlyle Group.
However, most firms are small to mid-size shops and can range from just two employees to several hundred workers.
Each fund typically has a life of 10 years, although ultimately timelines are up to the manager's discretion.
A sound business plan contains a strategy on how the fund will grow over time, a marketing plan to target future investors, and an executive summary, which ties all of these sections and goals together.
Another important step is to establish the firm and fund name.
Additionally, the manager must decide on the roles and titles of the firm's leaders, such as the role of partner or portfolio manager.