Forming & Operating a Hedge Fund | by John S. Lore, Esq.
Written by John S. Lore, Esq., managing partner and shareholder of Capital Fund Law Group, Forming & Operating a Hedge Fund is a brief guide for emerging fund managers. Click the button below to view and download the eBook on a mobile or desktop device.
This book provides a concise guide through the process of structuring, launching and raising capital for domestic and offshore hedge funds and other private investment funds. Throughout this book, we highlight pitfalls that fund sponsors should watch for and suggest best practices to safely and effectively navigate the process of forming and operating a fund.
Raising Capital Through a Regulation D Private Placement | by John S. Lore, Esq.
This eBook provides a guide through the process of raising capital by a private securities offering through the use of a private placement memorandum (“PPM”). The eBook explores the various components that are involved in structuring and preparing a private securities offering, including: how to determine the offering structure, choosing the proper registration exemptions, and marketing the offering to qualified investors.
Building Rapport with Investors | a White Paper
Strategic marketing and telling a unique brand story are significantly important when raising assets for a new investment management firm. For alternative investment managers, establishing clearly defined, consistent core values and messaging help build trust with investors. Consequently, branding must become a major focal point for firms operating in the alternative investments space.
Keeping messages consistent demonstrates to both prospective investors and potential joint venture partners a willingness to honor and fulfill commitments regarding their financial assets.
Forming a Real Estate Fund | a White Paper
This white paper discusses some of the key considerations in forming a private real estate fund, including strategy, structure, and investment terms.
Real estate securities offerings span a broad continuum of size and complexity. At the largest and most complex end of the spectrum are non-traded and traded Real Estate Investment Trusts (REITs), which are pooled investment vehicles requiring a large number of investors to satisfy regulatory and tax requirements and generally requiring a substantial asset base to justify the costs of formation and operation.
The private real estate fund strikes a balance between the two ends of the spectrum, enabling a sponsor to raise capital in a pooled fund without being constrained to do successive securities offerings on a deal-by-deal basis, and without the complexity, scale and substantial regulation of forming a REIT.
Marketing an Investment Fund | a White Paper
A manager's ability to raise capital is an important component in managing a successful fund. Properly-prepared marketing materials can play an important role in an investment fund’s success yet is often overlooked. This oversight is especially prevalent among emerging fund managers. If developed compliantly and appropriately, the inclusion of promotional materials may offer potential advantages by providing an overview of the fund, such as its strategy, performance, and manager pedigree. Marketing materials can be useful in a prospective investor’s decision-making process, as it will likely benefit the fund manager in securing investor commitments.
Preparing a Private Placement | a White Paper
To effectively raise capital through a Regulation D private placement, a company must safely navigate the complex regulatory structures that govern the offering. Unintentionally deviating from regulatory disclosure requirements can result in serious consequences for the issuer and its directors, officers, and managers. Experienced legal counsel plays a vital role in guiding companies through their various responsibilities and can help managers avoid devastating mistakes as they raise capital.
This white paper describes the process of conducting a private placement for an operating company in a debt or equity capital raise by a single company.
Starting a Private Equity Fund | a White Paper
A private equity fund is a pooled investment vehicle created for investments in equity securities and real estate. This white paper discusses some of the key structural considerations and investment terms involved in starting a private equity fund. The term “private equity fund” covers a broad spectrum of closed-end investment strategies, including early state funds (venture-capital), growth equity funds, leveraged buyout funds, and real estate funds. For specific information on structuring a real estate fund, see our white paper entitled: Forming a Real Estate Fund.
Hedge Fund Structural Considerations | a White Paper
Emerging hedge fund managers face a labyrinth of regulatory and tax considerations, investor reporting requirements, and business operation issues. Managers must also balance investor relationships, capital raising, developing their investment strategies, and a myriad of other roles. Operating a hedge fund entails significant legal exposure, with substantial liability for improper disclosure. Even inadvertent mistakes can lead to substantial personal liability.
The structure of a hedge fund is dependent on a number of tax, regulatory, and financial considerations. Fund structure is also driven in large part by the fund’s strategy, such as the degree of liquidity of the portfolio investments. The fund structure should be developed based on careful and thorough analysis with the assistance of an experienced fund attorney.
Hedge Fund Investment Terms | a White Paper
This white paper describes some of the most common hedge fund terms and how they apply to various hedge fund strategies.
One of the most important aspects of forming a hedge fund is setting the terms of the investment. When properly structured, hedge fund offering documents contain terms that adequately protect the fund sponsor and are attractive to investors. Hedge fund terms are driven by the fund’s strategy, the market trends within the fund’s asset class and the particular needs and objectives of the fund. It is crucial that the investment fund legal counsel has an in-depth understanding of current investment market trends and how those trends affect the strategy the fund will employ.
Investment Fund Legal Documents | a White Paper
This white paper lays out some of the key documents and filings that legal counsel will prepare for either an open-ended fund (hedge fund) or closed-ended fund (private equity/real estate fund).
To effectively start an investment fund, the sponsor must safely navigate the complex regulatory structures that govern the fund’s operations. Unintentionally deviating from regulatory disclosure requirements can result in serious consequences for the issuer and its directors, officers, and managers. Experienced legal counsel plays a vital role in guiding managers through their various responsibilities and can help managers avoid devastating mistakes as they launch a new fund.
Example Hedge Fund PPM Excerpt | by John S. Lore, Esq.
This is a brief excerpt of a sample hedge fund Private Placement Memorandum (PPM) with footnoted explanations of the PPM provisions.
The PPM is based on a fictitious master-feeder hedge fund using a global fixed-income arbitrage strategy. The accompanying explanations discuss the reasons behind certain disclosure language as well as
The excerpt also provides drafting tips, best practices recommendations, potential pitfalls and common mistakes in hedge fund PPMs.
Example Real Estate Fund PPM Excerpt | by John S. Lore, Esq.
The Following is a concise model excerpt of a private equity fund private placement memorandum (PPM). The PPM is based on a fictitious closed-end real estate fund investing in
The excerpt is intended to provide an idea of the type of information and level of detail that should be expected in a fund and provide a starting point for discussions with an investment fund attorney.
Example Operating Company PPM Excerpt | by John S. Lore, Esq.
The Following is a concise model excerpt of a private placement memorandum (PPM) for an operating company (a single-entity issuer, rather than an investment fund). The PPM is based on a fictitious
Although the document is focused on a narrow industry, the excerpt illustrates the level of specificity that an operating company PPM should have, particularly in its risk factors. Many issuers make the mistake of relying on template-driven boilerplate language that fails to identify risks and contingencies specific to the company’s business and regulatory climate.