How to Launch

a Private Equity /
Venture Capital Fund

Structure,
Key Fund Terms,
LP Tips and
Recommended
Advisers
 2

Introduction
Dear Reader,

The objective of this guide is to provide start-up private equity and venture capital
managers with comprehensive, commercial advice on how to form and raise their first
fund. Starting a new fund can be a daunting process, made all the more difficult by the
lack of information available to help a prospective manager achieve its ambitions, but
this guide seeks to provide you with some clarity.

Investors are key to any fund launch. To help the
process of winning over investors, MJ Hudson
through its LP Unit (a team of lawyers advising
investors on fund investments) spoke to a number
of its clients to gather tips on how new private
equity and venture capital managers should form a
fund. Those tips are dotted throughout this guide.
We cannot emphasise enough the importance
of third party advisors in the nascent stages
of fund formation. This is not meant to be a
self-serving comment (although lawyers have
an important role in fund formation), rather we
are pointing towards other third party advisors
such as accountants, placement agents and
compliance firms, whose guidance is essential
to the success of any fund.
As part of this guide we have listed a number
of trusted third party advisors who we have
worked with over the years (see Part 5 –
Recommended Advisers). These third party
advisors have been integral to the formation
of many of our clients’ funds.
The decision by the UK to leave the EU in June
2016 ('Brexit') will have an impact on the fund
management industry (eg, how the fund will be
regulated, where the fund should be domiciled
and how the fund can be marketed to investors).
The ultimate impact of Brexit will depend on
what terms the UK leaves the EU which means
this is an evolving area and up-to-date legal and
regulatory advice should be obtained.
Prospective managers need to be acutely aware
of the costs of fund formation and the level of
financial commitment required from the manager.
Although a large amount of costs will be covered
by the fund on its establishment, a manager will
have to cover its own costs and any interim costs
out of its own pocket. In addition, managers are
often required to invest alongside investors, so
the manager’s commitment to the Fund can be
substantial. To assist with understanding the costs
of fund formation we have set out indicative pricing
for third party advisors at Part 1 - Planning. These
cost ranges are merely estimates, are subject to
fluctuations and other costs may arise.
As specialist alternative assets lawyers, we work
with fund managers from inception to winding
up of funds. We have built up a considerable level
of knowledge on the various forms a fund can
take, the legislation fund managers are required
to comply with and the pitfalls a manager should
avoid. Whilst this guide is intended to be as
comprehensive as possible, no two funds are the
same, and no fund is ever really ‘plain vanilla’.
So when you want to start the process of setting
up the Fund, please feel free to contact us so we
can help you achieve your goals.

We hope this guide serves you well with your new business plans and wish you the very best of luck.
July 2016

With kind regards,

Eamon and Rob

Eamon Devlin Managing Partner Rob Eke Associate

+44 (0) 20 3203 3207 / Eamon.Devlin@mjhudson.com +44 (0) 20 3463 3203 / Robert.Eke@mjhudson.com

How to Launch a Private Equity / Venture Capital Fund


1. Planning
Fund Q&A 6
External advisers 7 - 8
Advisers’ fees 9 - 10
How to choose a structure for
the Management Group 11
What are the other
business considerations? 12
What are the key
considerations on a spin-out? 13
Timetable to closing 14
4. Typical Fund Terms
What are the typical
terms of the Fund? 34 - 36
How to Launch a Private Equity / Venture Capital Fund
3
Index
2. Structuring 3. Marketing and Regulation
What are the key considerations How is a private equity
when structuring a Fund? 16 fund marketed? 24
Choice of Domicile 17 - 18 Marketing and Regulation 25
Why Onshore? 19 What are the regulatory
issues when marketing 26
Why Offshore? 20
Marketing by a Sub-threshold AIFM 27
What are market terms
for a £100 million Fund? 21 Marketing by a Non-EU AIFM 28
What are the key What is meant by "Marketing" 29
Fund documents? 22
What is reverse solicitation? 30
How is a private equity
manager regulated? 31
AIFMD 32
5. Recommended Advisers
Recommended
Advisers 38 - 52

Notes on the guide
The private equity and venture capital industries employ an extensive,
and sometimes bewildering, body of jargon. We have attempted to limit our
use of jargon to the following key terms:
Carry
A share of any profits that the general
partners of private equity funds receive
as compensation.
Cornerstone investor
An investor who commits a large
proportion of the Fund’s total commitments
and whose commitment will be used to
draw in additional investors.
Fund
The investment fund established by the
Management Group.
General Partner
The entity that acts as general partner
to the Fund, if the Fund is structured as
a limited partnership.
"A well-known cornerstone investor
is usually helpful, not only for the
fund but also for strategic advice –
however, they might ask for a
sweet deal."
Peter Schwanitz, Managing Director
Portfolio Advisors
How to Launch a Private Equity / Venture Capital Fund.
4
Hurdle Management Group
A hurdle rate is the minimum rate of The Manager (unless the Manager is a third
return on a project or investment required party service provider), the General Partner of
by a manager or investor. In order to the Fund (and any future General Partners of
compensate for risk, the riskier the project, future funds), the carried interest vehicle, and
the higher the hurdle rate. an investment adviser, if appointed.
This is interchangeable with ‘GP’ and
‘Sponsor’ in their general senses.
IRR
A measure for evaluating performance of
investments. The IRR rule states that if the
Manager
internal rate of return (IRR) on a project or The entity specifically appointed to
investment is greater than the minimum manage the Fund.
required rate of return – the cost of capital –
then the decision would generally be to
go ahead with it.
Regulatory Umbrella
An FCA authorised entity through which
Investment Adviser an unauthorised firm can use its regulatory
An entity appointed by the Manager to
provisions to (under supervision of the
Regulatory Umbrella) market the Fund and
provide recommendations on investment provide investment advice to the Manager.
and divestment decisions. For some
Management Groups, the functions of
Manager and investment adviser may
be done by the same entity.
All of the costs and structuring suggestions contained in this guide in
the context of a hypothetical Fund with the following headline terms:
New private equity or The investors are a mixture of HNWs
venture capital fund manager. family offices, funds of funds and institutions.
• •
A maximum of £100m of English, Scottish or a Channel
commitments to the Fund. Islands Limited Partnership.
• •
Closed-ended (ie, investors are Most of the investment team is
locked in for the life of the Fund). based in Europe.
 1
Planning

Fund Q&A 6

External advisers 7 - 8

Advisers’ fees 9 - 10

How to choose a structure for

the Management Group 11

What are the other

business considerations? 12

What are the key

considerations on a spin-out? 13

Timetable to closing 14
 6

Fund Q&A
What is the Fund’s What should I call the Who will be
Investment Thesis? Management Group and the Fund? in the team?

This is a fundamental decision for the
Management Group and it is vital that the
investment thesis is able to satisfy the
following, in the minds of investors:
1. There are sufficient investment
opportunities available for the Fund to
invest all of its committed capital
2. There will be a market to sell the
Fund’s investment interests within the
duration of the Fund
3. The Management Group has sufficient
skill, experience and relationships to
successfully execute the investment thesis
Ideally, the investment thesis will feel
like an extension of the team.
Whilst a specialist marketing agency can
develop a full brand and visual identity for
the Management Group and related entities,
there is not always time or budget for this. In
any case, care must be taken to ensure that
the name chosen for the Management Group
and the other entities does not infringe on
the registered intellectual property of others.
The use of a trade mark or naming agent can
streamline this process. Care must be taken
not to use a name that may be restrictive, in the
future. Ideally, the name of the fund will include
the name of the Management Group and also
clearly and succinctly express the investment
thesis, so that potential investors are quickly
able to grasp the opportunity presented.
The members of the team must have the
requisite skills, experience and relationships
in order to successfully execute the investment
thesis and run the Management Group
efficiently. Investors will be more amenable
to new teams that have worked together
previously and will want to see attributable
track records that demonstrate an ability to
make and exit investments in the same or
related areas to the Fund’s investment thesis.

How much money What are the type of

"Proper demonstrable experience
will the Fund raise? investors and location? of sourcing, executing, managing
and exiting several investments as
principal is crucial. All components
are important, but selling skills
are less common."
Neil Sneddon, Director, Private Equity Funds
BMO Global Asset Management (EMEA)

When deciding how much money to raise,
the Fund’s operational expenses need to
be kept in mind as the management fee
is calculated on the size of the Fund.
The expected investment size and
anticipated pace of investment are also
important considerations. NB some
regulations (eg, AIFMD) have exemptions
for Funds below a certain size.
One of the considerations that is important
for the efficient tax structuring of the Fund is
the type and location of likely investors. It is
important to carefully consider which investors
are likely to be able and willing to invest in a
first time manager and to assess their likely
location, if such is not already known. In
order to successfully raise a debut Fund, it
can be helpful to create “social proof” around
the quality of your investment thesis and
Management Group.

Part 1 - Planning
 7

External advisers
The launch of a new Management Group and its first Fund
requires a range of advisers to work together.
Part 5 to this guide contains a list of some of our trusted partners who can provide the services listed below. It provides a breakdown
of the services they offer, their strengths and their contact details. Indicative pricing for those service providers is on pages 8 and 9.
Below is an overview of the advisers typically required when launching and operating a Fund:

Compliance Consultants Regulatory Umbrella Placement Agent

The Management Group should appoint
compliance consultants to advise on acquiring
the necessary regulatory permissions and
on the development of a formal compliance
program. Compliance consultants are a cost-
effective solution for these matters and will
often have close contacts with the necessary
regulators, which can help accelerate the
authorisation process.
Many of a Management Group’s activities in
connection with a Fund are regulated in the
UK. FCA authorisation can take time and be
commercially obstructive, particularly where
prospective investments are lined up or capital
is ready to be committed. A solution to this is to
appoint a regulatory umbrella. This is an FCA
authorised entity which extends its regulatory
provisions to an unauthorised Management
Group and supervises the Fund’s investment
and marketing activities.
Marketing advisers and placement agents
advise on the marketability of the Fund to
potential investors. They can assist with the
preparation and production of key marketing
documents, including a Fund presentation and
the PPM (“Private Placement Memorandum”).
Placement agents with the correct
permissions can introduce potential investors
to the Management Group and also act as
relationship managers for the Management
Group throughout and beyond the subscription

Fund Accountants
The Fund will also appoint accountants.
Together with the lawyers, they will advise on
the best domicile for the Management Group
and the Fund taking into account tax efficiency
and other factors. The accountants will also
provide audit and other services during the
life of the Fund.
Some fund structures will include an entity that
acts as Manager of the Fund. Otherwise, the
same functions are performed by the General
Partner. A regulatory umbrella can act as this
Manager. Using a regulatory umbrella in this
way can save considerable time and expense for
the Management Group on the first fund raise,
as it cuts out the cost of ensuring all relevant
entities are fully compliant with the applicable
fund management regulations.
process. Marketing advisers will tend to charge
flat fees for advice and document production
and placement agents may receive fees in a
number of ways, including a signing-on fee, a
success fee tied to the amounts committed by
investors and, occasionally, a part of the carried
interest of the Fund.
"Ask a trusted adviser to run your fund
proposition past experienced LPs who
have an active interest in supporting
first time funds before lifting your
head above the parapet."
William Gilmore, Senior Investment Manager
Aberdeen Private Equity

Part 1 - Planning

External advisers
Swiss Representative
If the Management Group is marketing to
qualified investors in Switzerland (who are not
regulated investors such as banks), it will be
necessary to appoint a Swiss Representative to
ensure that the Fund is promoted in accordance
with Swiss law. It will also be necessary to
appoint a paying agent (essentially a bank
account for Swiss investors to pay into). Any
marketing to retail investors in Switzerland
would require full authorisation by the Swiss
Financial Markets Authority, and is undesirable
for a private equity or venture capital manager.
Lawyers
The lawyers appointed by the Management
Group will create the documents for the
establishment of the entities making up the
Management Group and the Fund and will
lead negotiations with investors and manage
the closing of the Fund.
The lawyers will also advise on the most
appropriate structure and jurisdiction (including
onshore and offshore options) that will best
fit the related investment strategy, and
regulatory considerations for managing
and marketing the Fund.
8
Fund Insurance
Administrator
During the course of its business, the
Management Group will require insurance
The Manager will need to appoint a fund
for various activities. In particular, directors’
administrator to perform various operational
and officers’ liability insurance, professional
tasks. Depending on the jurisdiction of the Fund,
indemnity, and commercial crime insurance
it may also be necessary to appoint additional
are normally required for its operations as
fund administrators for the carried interest
a Management Group. When conducting
vehicle or for an offshore Manager. Appointing
investment transactions, transactional risk
different administrators for the Fund and for the
insurance is a prudential step in case of
other entities may help avoid conflicts of interest,
unforeseen liabilities. For a typical private
but will typically incur additional costs.
equity fund (perhaps less so for venture
The AIFM Directive may require the appointment investments where the controlling stake is
of a fund administrator if the directive requires smaller), it will also be important for portfolio
the Manager to separate asset safe-keeping and companies to have adequate insurance. For
management functions, and segregate investor
assets from those of the Manager. If the fund
each of these, a Management Group will need
to have a strong working relationship with an
administrator is not sufficiently independent insurance broker.
for the purposes of the AIFM Directive, the
role of depositary may have to be taken on by
an independent third party custodian. Fund
Administrator fees are usually paid out of the
Fund’s assets as an operating expense.
"Emerging managers should:
- Have verified track record
- Raise fund size in line with strategy
“Remain humble and be honest about past - 1st fund maximum of eight companies
mistakes – everyone makes them and - Next fund step-up maximum of 25%
investors look to understand how they - F ull access investors to next
have been addressed going forward.” funds + LPAC seat."
David Jeffrey, Partner, Head of Europe Jos van Gisbergen, Senior portfolio manager
StepStone Group Europe LLP Achmea Investment Management B.V.
Part 1 - Planning
 9

Advisers’ fees - One-Off

This graphic illustrates the fees that Welcome

might typically be incurred by a £100m ONSHORE

Fund when retaining different advisers.
It should be remembered that other
services may be necessary, and that this
would usually increase costs.
Ongoing fees are expressed as a
cost per annum.

Typical onshore countries:

England • Scotland • Luxembourg

Accountants Administrator
£25k - £95k £12.5k - £18k
One-Off One-Off

Compliance
£5k - £15k
One-Off

Administrator Lawyers
£25k - £40k £160k - £270k
One-Off One-Off

Placement
Agent
£1m - £3m
One-Off
Welcome

OFFSHORE

Typical offshore countries:

Jersey • Guernsey • Cayman Islands

Part 1 - Planning
 10

Advisers’ fees - Ongoing

Welcome

ONSHORE

Accountants
£20k - £50k
Ongoing p.a.

Administrator Compliance
£50k - £250k £18k - £22k
Ongoing p.a. Ongoing p.a.

Regulatory
Administrator
Umbrella
£60k - £130k £100k - £300k
Ongoing p.a.
Ongoing p.a.

Swiss
Representative
£5k - £12k
Ongoing p.a.

Welcome

OFFSHORE

Part 1 - Planning

How to choose a structure for
the Management Group
The choice of location and structure depends on the following factors:
1 2
Tax
The location from where the Management
activities will be performed – if the activities
are likely to be largely performed from a
specific territory, this is likely to create a
taxable presence for the Management
Group in that territory.
• of the Manager together with the domicile, as
The tax profile of the executives – for example
if they are UK resident or not, if they are
domiciled in the UK or not. Where individuals
are not UK domiciled or resident and activities
are wholly or partly carried abroad it may be
possible to optimise the tax efficiency of the
arrangements by the use of offshore entities.
• The Manager may be a part of the
Whether there is likely to be a need to re-invest
significant amounts of profits into the Manager/
Investment Adviser entity for working capital
purposes. In that case there may be benefits
to having a corporate entity as the Manager
or Investment Adviser in order to minimise
taxation on profits that are reinvested. If it is
unlikely for there to be a need to re-invest
significant amounts of profits it may be possible
to benefit from Employer’s National Insurance
Contribution savings by setting up the
Manager/Investment Adviser entity as
an English Limited Liability Partnership.
•
Other personal circumstances of the
Management Group members – e.g. plans
for succession, protection of assets etc.
This is usually relevant in terms of how the
management team hold their interests in
the management structure or the Carry – for
example whether they hold the interest
directly or via trusts or other structures.
11
Investor Demands
A cornerstone investor or significant limited
partner may want to take a share in the
ownership of the Manager in order to exercise a
degree of control over a newly formed Manager
or ensure that it is properly incentivised.
This may affect the intended structure
the bargaining strength of such investors may
be enough to insist on tax jurisdictions
or ownership structures favourable to
their requirements.
Part 1 - Planning
3
Regulation
Operating and managing a private fund
is a regulated activity in most jurisdictions,
including the UK.
•
In the UK authorisation is by the FCA and
is typically a prerequisite to undertaking certain
activities. Those activities include marketing the
Fund, operating the Fund, and managing and
arranging the investments made by the Fund.
The regulatory burden is prohibitively greater
for a fund which includes retail investors, so a
private equity fund is not made available to this
group of investors.
•
Management Group, or it may be a third
party service provider. A third party service
provider is a common solution for first-time
funds to overcome the time delay in establishing
a regulated entity. Further, investors prefer to
see a well-established administration
managing the Fund.
•
Certain specialised funds may be managed
offshore with lighter touch regulation. The
flipside of this is investors’ reluctance to accept
an unregulated Manager or one which is subject
to less regulatory oversight.
"Comply with ILPA guidelines / best
practices or explain why not."
A large Netherlands-based pensions fund
 12

What are the other

business considerations?
Branding and identity Office Space IT

Like starting any business, the
establishment of a Management Group
requires many practical steps aside from
the legal considerations.
One of the first is the branding and
identity of the Management Group: the
name, the logo, the image that it will
present to prospective investors
and partners.
There are many considerations to take into Once the Management Group has a brand
account when selecting the location, including: and a physical presence, the principals can
the space required both at present and establish an IT system and a website. When
in line with projected business growth deciding on the content to put onto a website,
• the Management Group will need to take
the likely working patterns of into account the restrictions on marketing
executives and employees investment opportunities, with appropriate
• disclaimers in place.
it is a location where the target Common practice is to place the most
employees currently work sensitive information (from a regulatory
• perspective) behind a wall that can only be
investors are concentrated there passed by the user confirming that they
(such as Mayfair in London) are a certain category of investor.
•
that the area is attractive as a
working location overall.

People and Wellbeing Corporate Governance

Many executives and other employees often
join new start-up firms from large established
organisations with high quality benefits and
HR services. It can be difficult to establish
equally attractive packages compared with such
organisations. Certain services such as payroll
and benefits such as healthcare and pension
plans can be outsourced to save costs by taking
advantage of scale.
Corporate Governance is a key issue for
investors irrespective of the regulation currently
in force or pending. It is important for the
Management Group to create a structure that
will provide sufficient oversight for its legal
obligations and also assure investors that it is
competent to control significant amounts
of invested capital.
A sound structure will include committees to
oversee the management of the Management
Group, the investment strategy and
investments, the valuation policy, operational
risk, compliance matters, and compensation
and performance reviews.
A sensible plan and growth forecast is an
essential piece of homework for any new
fund manager. Not only does this exercise
encourage good corporate governance but
also helps map out potential cost increases
as the Fund grows.

Part 1 - Planning

What are the key
considerations on a spin-out?
What is a spin-out?
A spin-out is where a team of individuals
leaves its current employer (whether a
management group or a larger institution, such
as a bank) to establish a new business. This
business may have links to the former employer
or may be independent.
Depending on the events leading up to the
spin-out, there may be the opportunity to
seed the new business with a legacy portfolio.
Assuming such a portfolio is in good order,
it may be attractive for potential investors
to have some visibility on some of the new
company’s investments.
When financing a legacy portfolio, care should
be taken to avoid taking investments merely
from dedicated secondary investors, as these
may be unable to participate in future Funds
marketed by the Management Group.
"If you are using a track record in your
marketing materials from a previous
employer ensure that you have sought
written permission to do so."
William Gilmore, Senior Investment Manager
Aberdeen Private Equity
13
Employment Investor
When establishing a Management Group as Principals of the Management
a spin-out from an existing organisation, or Group who have worked previously in funds
when finding employees from elsewhere, will need to have their previous contract of
it is important to consider whether any employment reviewed for any restriction on the
restrictions prevent the person from joining solicitation of investors who have participated
the Management Group. If restrictions exist, in funds managed by their previous outfit.
whether in their current or former employment
contracts, legal advice should be sought on how
to overcome them.
Some common restrictions include:
notice periods and whether the employee
in question is required by their contract of
employment to serve their notice period on
‘gardening leave’ or otherwise.
•
good leaver/bad leaver provisions which
may affect their receipt of carried interest
or deferred bonuses. A good leaver typically
is one who leaves due to retirement at the
normal retirement age, redundancy, death or
permanent disability. A bad leaver typically
is one who is summarily dismissed or who
resigns. Where a solicited employee stands to
lose bonuses or carried interest entitlements as
a result of resignation, the issue will need to be
handled with sensitivity.
•
non-competition clauses on termination
of the employment contract which prevent
the employment for working for a competitor
of their current employer for a certain
period of time.
similarly, the employment agreements
of the principals of the Management Group
should also be reviewed in the context
of the above considerations.
Part 1 - Planning
 14

Timetable for closing

The timetable below is set out based on the assumptions that the Management Group
has secured a cornerstone investor for first close, and that it will use a Regulatory
Umbrella and act as appointed representative to a FCA authorised firm.
If the Management Group is seeking regulation from the FCA for first closing (ie, will not be using a Regulatory Umbrella), then a timeframe of
four to nine months for the ‘Seeking Regulation’ step should be anticipated. If there is no cornerstone investor providing sufficient commitments
then a period of two to twelve months of ‘pre-marketing’ would probably be necessary. Once the Fund reaches first closing, and if it has not already
obtained enough commitments to meet the cap on fund size, the Management Group will be able to commence investing whilst simultaneously
continuing to seek out commitments from investors. This subsequent fund raising period - the Commitment Period – is subject to a limit in the
limited partnership agreement, typically 12 months.

Appointment of advisers Choice of Structuring

domicile the Fund

1 – 3 weeks 1 – 2 weeks 1 – 3 weeks

Structuring the Review Drafting legal

management group and regulation documents
business considerations
1 – 2 weeks 3 – 6 weeks 3 – 7 weeks

Marketing Negotiating First

the fund fund terms closing

4 – 8 weeks 6 – 8 weeks 14 weeks

Part 1 - Planning
 2
Structuring

What are the key considerations

when structuring a Fund? 16

Choice of Domicile 17 - 18

Why Onshore? 19

Why Offshore? 20

What are market terms

for a £100 million Fund? 21

What are the key

Fund documents? 22
 16

What are the key considerations

when structuring a Fund?
The Management Group will choose a structure under the influence of a variety of factors and interests. The Management Group, influential
investors, and any third party service providers will participate in these decisions and have an interest in their outcome. The success of the
Fund can depend on making the right choices at this stage.

It must be possible to have a flexible
structure which can be easily tailored
to the investments and the needs of
the investors.
Flexibility
The most appropriate structures for this In relative terms, the limited
are the limited partnership and the limited partnership provides more flexibility
company, as the governing documents can than a limited company.
be drafted to accommodate a wide range of
interests (within certain legal restrictions).

Most fund structures limit
the liability of the investors
to the amount they have
paid to the Fund.
Limited Liability
A protective measure The structure of choice is the
required by investors, limited partnership. A ‘general
who do not want to partner’ assumes unlimited
assume unlimited liability to third party creditors
liability for an for the losses of the partnership
investment managed and the ‘limited partner’ has its
by another. liability to third party creditors
restricted to the amount of
capital committed.
The limited partner A limited company also
cannot take part in the provides investors with
management of the limited liability, but it is
partnership without typically not a tax efficient
putting its status as structure.
limited partner at risk of
being converted into that
of a general partner.

Tax Efficiency
The key fund structuring consideration is that the Investor should not be worse off Where investors have different tax
tax wise by investing via the fund structure compared to investing directly. For this reason requirements (for example where some
where returns from the underlying assets are likely to be in their majority capital gains, which prefer a tax transparent and others a
are generally taxed at lower rates than income, it is often beneficial to the investor to have a tax opaque structure) it may be possible
“tax transparent” structure (where the investor pays tax rather than the fund entity) to give to accommodate those via parallel or
them access to the capital gains directly. Partnerships are often used as fund vehicles because feeder fund structures but this adds to the
they are generally treated as “tax transparent”. administration burden and cost base.

In the UK (for example) only an
authorised person may manage
and arrange investments on
behalf of others. Having the
general partner as the authorised
person is unattractive as it
exposes the regulated entity to
unlimited liability.
Regulation
Typically, a ‘blocker’ vehicle (such
as a limited company) acts as
the general partner of the Fund.
It then appoints an authorised
Manager to operate the Fund.
To reduce the regulatory burden, The Fund is typically not
the Fund will often only be regulated; it is only the
marketed to certain eligible Manager and any appointed
investors, or require commitments investment adviser who require
of a specified minimum amount; authorisation.
otherwise regulators such as the
FCA will impose a higher regulatory
burden on marketing to protect less
sophisticated investors.

Part 2 - Structuring
 17

Choice of Domicile
The diagram in Chart 1 shows an onshore
Management Group, Manager, and Fund
structure, each of which is based in the UK.
The Fund is a limited partnership registered
in England and the general partner is a limited
liability company also incorporated in
England (or Scotland).
By contrast, the carry partnership and its
general partner are entities established in
Scotland. This is simply a law-driven requirement,
as English limited partnerships cannot be
partners of other English limited partnerships
without adverse disclosure requirements.
The Investment Adviser requires FCA
authorisation to provide investment services
to the Manager (and ultimately the Fund). An
alternative, which is shown in this diagram, is
where the Investment Adviser uses the benefit of
a Regulatory Umbrella to give investment advice
to the Manager. In this situation, the Manager is
also the provider of the Regulatory
Umbrella service. The Manager, which is
FCA authorised, appoints the Investment
Adviser as its appointed representative to
give the Investment Adviser the necessary
regulatory cover.
This is often a short-term measure, until
it is commercially viable for the Investment
Adviser to obtain the necessary FCA
authorisations to act as the Manager.

Chart 1 - Onshore (English) Manager and English Fund

Investment
Adviser Management
(Limited Liability Team
Partnership)

LP

Carried Interest

ARA IAA

Carry GP
100% (Limited GP Carry
Company) Partner
Interim (Limited
Manager and Partnership)
Regulatory
Provider
(FCA Regulated) MA LP Carried Interest

MA
GP
100% (Limited GP Fund LP’s Investors
Company) (Limited
Management Fee Partnership)

Key:
LP Limited Partner
Portfolio
GP General Partner
Investments
MA Management Agreement
ARA Appointed Representative Agreement
IAA Investment Advisory Agreement
Scotland
England

Part 2 - Structuring
 18

Choice of Domicile
An offshore (Channel Islands) Fund with advises the general partner to the same
an onshore (UK) Investment Adviser is extent as it would advise the Manager in the
shown in Chart 2. structure in Chart 1. The Investment Adviser
The fundamental structural difference is that is an appointed representative of a Regulatory
the role of the Manager is undertaken by the Umbrella until the Investment Adviser obtains
general partner of the Fund, which is regulated its own FCA authorisations.
by either the Jersey or the Guernsey Financial An alternative to this structure is where a
Services Commission. The Investment Adviser UK Manager is appointed, replicating the
general partner–Manager–Investment
Adviser structure in Chart 1.
This may be more suitable if the
Management Group cannot maintain an
infrastructure offshore that is sufficient to
satisfy investors that the Fund is properly
managed, or comply with the regulations.

Chart 2 - Onshore (English) Investment Adviser and Offshore (Jersey/Guernsey) Fund

Investment
Adviser Management
(Limited Liability Team
Partnership)

LP

Carried Interest

ARA

Carry GP
100% (Limited GP Carry
Company) Partner
Interim (Limited
Manager and Partnership)
Regulatory
Provider
(FCA Regulated) LP Carried Interest

100%
GP
IAA (Limited GP Fund LP’s Investors
Company) (Limited
Management Fee Partnership)

Key:
LP Limited Partner
GP General Partner Portfolio
ARA Appointed Representative Agreement Investments
IAA Investment Advisory Agreement
Contractual Relationship
Ownership
Jersey / Guernsey
UK

Part 2 - Structuring
 19

Why Onshore?
The following outlines some of the positives and negatives of using an onshore structure.

SHO

ON

RE
POSITIVES
NEGATIVES
Fund entities can be established Required to publish limited
within 5 business days partnership accounts
• •
Members of Management Group can benefit from Unless VAT-grouped, 20% VAT charged on
the HMRC/BVCA memoranda under which their management fee, and HMRC can also make VAT
carried interest should be taxed as capital gains enquiries to manager for the previous 4 years
• •
As the directors of the fund’s GP can be members The names of investors can be accessed at
of the Management Group, deals can be executed Companies House, as there is a duty to file records
promptly in comparison with structures in which the of the admission / retirement of limited partners
directors are third parties •
• Offshore investors may be required to file with
Cheaper to administer than an offshore fund HMRC for tax reference number
•
EU-based Managers can elect to become a
full scope AIFM and use the ‘passport’ to raise
funds in Europe
•
If marketing under AIFMD the Management Group
could be provided regulatory cover by a Regulatory Umbrella,
until an FCA application is made to allow a Management
Group entity to step into the role of Manager

"Actions speak louder than words.

Other than a stellar track-record,
making a very significant commit-
ment of your own capital to the fund
is probably the most convincing
argument you can make."
Richard Clarke-Jervoise
Stonehage Fleming

Part 2 - Structuring
 20

Why Offshore?
The following outlines some of the positives and negatives of using an offshore structure.

"Differentiation and specialist offerings

are key for us. It’s not just what you can
do better or different than your previous
firm but also relative to the market."
Maria Prieto, Adveq

FSHO
RE
OF

POSITIVES
NEGATIVES

Preferred by certain investors Offshore administrator and directors required

(especially family offices) who are •
investing through offshore vehicles Outside of the EU and will therefore only
• be able to raise funds in the EU through private
Details of limited partners are not normally placement under different national regimes*
available on public records •
• Transfer pricing risk – the pricing of services provided
VAT advantages for fees paid to to the Fund by a UK affiliate (e.g. a member of the
Management Group, but extent of advantage Management Group) may be subject to adjustment
will vary depending on exact structure by HMRC if not on an arm’s length basis
• •
No requirement to register for HMRC The appointed directors will need to convene a meeting
tax reference number in advance of key decisions being taken, which may impact
• the speed at which deals / decisions can be taken
No requirement to file fund
annual accounts

The information in the table is indicative only and represents our experience of cost and timing when structuring first time funds.
*Further to recently published ESMA guidance (July 2015), the AIFMD ‘passport’ will be extended to certain jurisdictions in due course

Part 2 - Structuring

What are market terms
for a £100 million Fund?
MJ Hudson gathers the latest market intelligence on fund terms and trends. Below is a sample of the information relating
to first-time funds that closed in 2015 and 2016. Some of the terms used below are explained further in this guide.
Benchmarking of Fund Terms – Category: Small / Mid-Market European Venture Funds (All closed in 2015 and 2016)
Structure of Fund
and Jurisdiction
Closed-ended limited partnership.
In order of popularity: England, Scotland,
Channel Islands, and Luxembourg.
General Partner
Typically based in same jurisdiction
as the Fund.
Investment Adviser
Typically based in London –
regulated by the FCA or an Appointed
Representative arrangement.
Carry Vehicle Partner
Closed-ended limited partnership,
based in the Fund’s jurisdiction.
Target Fund Size
£100m.
21
General Partner/Team Carry
Commitment 15% to 35% - note possibility of ‘ratcheted’
carry, but this is not standard.
Between 1.5% and 6%. The mean amount
is 3%, and it is always at least 1%.
Hurdle
Term 6% to 9%, annual compounded. Some
U.S. and some European venture funds
7 to 11 years, which may be extended for
have no hurdle, but this is rare and not
up to 2 additional 1-year periods. Investor
for emerging managers.
consent for second extension is a common
investor protection.
Key Person Provision
Investment Period All have Key Person provisions which
give Investors the right to suspend the
The Fund’s investment period is typically
Investment Period.
between 4 to 5 years.
Management Fee No Fault Removal
After the first or second anniversary of
During the Investment Period, the
final closing, Investors holding at least
Management Fee is normally within a
between 50% and 85% of Total Commitments
range of 1.75% to 3% per annum.
may vote to remove the General Partner.
After the Investment Period, this is
reduced to a range of 1.5% to 2% of
actively invested capital.
Transaction Fees
Advisory fees, transaction fees, "Have a vision for what you want to
commitment fees, break-up fees and become. Be able to articulate why you
other similar fees generated will be 100%
have a compelling relative competitive
offset against management fee.
position and why the strategy you
target should be in LP portfolios."
Jim Strang, Managing Director
Hamilton Lane
Part 2 - Structuring
 22

What are the key

Fund documents?
Limited Partnership Agreements (LPA) Subscription booklets Side letters

This is the main document for the Fund. These are completed by the investors to A side letter is a separate agreement between
It establishes the agreed legal structure commit to the Fund and will set out their the Manager and an individual investor. Such
and sets out the rights of the investors, their individual capital contributions together with an agreement will set out a variation of the
arrangements with the Manager and the representations and warranties by both the standard terms of the Fund.
operation of the Fund. Also need for LPA Manager and the investor. The investor will The reasons for side letters vary: they are
the carry vehicle. also be required to fill out a questionnaire to frequently used to accommodate a particular
It will typically provide for the: confirm their eligibility to invest in the Fund investor’s regulatory or tax requirements.
under applicable laws and to provide other
investment objectives of the Fund and any Another reason may be that a particular
information required by the Manager.
investment restrictions investor’s contribution allows it to command
• better terms on which to invest.
allocation of profits and losses, carried The LPA will usually contain a ‘Most Favoured
interest and management fees, and other Legal Opinions Nation’ clause which prevents more
economic terms advantageous terms being offered to a single
• investor (unless for tax or regulatory reasons)
distribution waterfall of the Fund and without those terms being offered to all
any other distributions investors, or at least, all investors with equal or
• greater commitments to the Fund.
payment of Fund expenses
•
administration and resolution of
conflicts of interest
• The legal opinions are provided by the Fund’s
obligations of capital contribution and any legal advisers for the benefit of the investors.
variance of those obligations They affirm that, for example, the Fund is duly
• incorporated and that the investors have only
provisions for investors who default on their limited liability.
capital obligations and in particular punitive
penalties such as the forced sale of their
current holdings, interest payments or
the loss of certain rights as an investor "My assumption is that a new manager
• has a track record of investments. If
financial reporting
a manager that hopes to raise capital
•
transfer and exit provisions.
from LPs does not have a track record,
then they should make some invest-
ments on a deal-by-deal basis until
they have a relevant track record."
Tom Eriksson, aeris CAPITAL

Part 2 - Structuring
 3
Marketing and Regulation

How is a private equity

fund marketed? 24

Marketing and Regulation 25

What are the regulatory

issues when marketing 26

Marketing by a Sub-threshold AIFM 27

Marketing by a Non-EU AIFM 28

What is meant by "Marketing" 29

What is reverse solicitation? 30

How is a private equity

manager regulated? 31

AIFMD 32
 24

How is a private equity

fund marketed?
Potential investors are usually known to either the Management Group or the placement agent. Other marketing materials will be
distributed when seeking commitments to the Fund, such as the private placement memorandum (see below). The fund will not typically
be marketed to the general public or through general solicitation channels (such as trade publications), due to regulatory constraints.
Funds are typically marketed on a small scale basis to potential investors who are often:

Pension funds Financial institutions Foundations

Sovereign wealth funds Funds of funds Insurance companies

Family offices High-net worth investors

Part 3 - Marketing and Regulation

 25

Marketing and Regulation

What are the "road show" materials? What is the private placement
The road show materials will identify the memorandum (PPM)?
Management Group and its principals. The
The private placement memorandum is the key
documents will summarise the proposed terms
marketing document for the Fund.
of the Fund and are used to secure the support
of Cornerstone Investors. These will usually It will provide to investors:
include an investor presentation, highlighting the •
attractive features of the Fund, its investment an executive summary of the Fund and its
thesis and the Management group, as well as a principal terms
series of supporting documents, including a due •
diligence questionnaire. a detailed explanation of the key commercial
terms of the Fund, including
-
the investment strategy of the Fund
-
the investment process, particularly where the
Manager will use its own unique connections and
expertise to secure investments
-
the market environment and opportunities for
investment in the target sector (if any) of the Fund
-
an overview of the Management Group and
its principals, in particular their track record
and relevant expertise. For a spin-out, the
Management Company itself will not have a
track record, and the principals should consider
whether the terms of their employment with their
previous employer restricts their ability to market
their own personal track record
-
the performance of previous/similar investments
and the calculation of the IRR
•
a summary of the risk factors

"My tip for new managers is that

they should be flexible with fees
"Ensure you have a compelling and and structures regarding a new fund.
differentiated strategy on which your We hear too often that 2%/20% is
team has consistently delivered strong market standard."
returns and can continue to do so." Tom Eriksson, aeris CAPITAL
Mark Nicolson, Partner
SL Capital Partners LLP

Part 3 - Marketing and Regulation

 26

What are the regulatory issues

when marketing?
Marketing a Fund is regulated in most jurisdictions
(by the FCA in the UK and the SEC in the U.S., for
example) and any cross-border fundraising will need
to comply with various local regimes. In the UK,
promoting a Fund is possible without authorisation
where the promotion is only to a limited class of
investors such as investment professionals, high
net-worth companies and sophisticated or high
net-worth individuals.
Also, by limiting the promotion to a certain number
of investors, or by imposing a certain minimum
investment threshold, the requirements for an
offering document compliant with the European
Union Prospectus Directive can be avoided.
Even if an exemption is intended to be
used for promotion, it is necessary to seek
authorisation for the Manager (unless an
authorised third party service provider is
used as the manager) and the individual
employees. Marketing a fund in Europe has
been complicated by the AIFMD, and its
inconsistent implementation across
the European Union.
If the Manager is a full scope AIFM it will be
able (in theory) to market the Fund to professional
investors across Europe without further
notification or authorisation outside of the home
member state of the AIFM (but some countries
require a depositary). For Managers that are
either sub-threshold AIFMs or non-EU AIFMs, the
position is markedly different depending on the
member state that the marketing will occur in.

FIN

NOR
SWE
EST

LAT

DEN
LTU
IRL

GBR
NLD

BEL GER
LUX CZE

SVK

AUT
SWI HUN
FRA
ROM

ITA
ESP

Part 3 - Marketing and Regulation

 27

Marketing by a Sub-threshold AIFM

If the Manager is a sub-threshold AIFM
(basically a venture or private equity manager
with less than €500 million of assets under
management, assuming no leverage) it
may be able to market, depending on the
implementation of AIFMD by different member
states. There is no harmonisation of laws
in this respect. The below map is an outline
guide, but if planning to market in any of the
states shown below, legal advice should be
sought from local lawyers first. The map shows
whether marketing is possible: (i) with or
without prior notification (i.e. a declaration of
intent to market); (ii) with prior authorisation
(i.e. marketing cannot commence without the
authorisation of the state in question; or (iii)
not possible at all. Norway and Switzerland are
included on the map, despite not being member
states of the EU, as they have enacted laws
that implement, or are similar to, provisions
of the AIFMD.

Key:
Possible, with or without prior notification
Possible, subject to prior authorisation
Not possible

FIN

NOR
SWE
EST

LAT

DEN
LTU
IRL

GBR
NLD

BEL GER
LUX CZE

SVK

AUT
SWI HUN
FRA
ROM

ITA
ESP

Part 3 - Marketing and Regulation

 28

Marketing by a Non-EU AIFM

Under the AIFMD, marketing by non-EU AIFMs
in Europe is regulated. The AIFMD sets out a
minimum set of compliance standards to be
met by such managers, but member states have
some latitude to impose additional requirements
(and some have). One of the main requirements
is for the manager to register with the financial (ii) with prior authorisation (i.e. marketing cannot
authority in a relevant member state. The commence without the authorisation of the state
following map sets out the requirements to be in question; or (iii) not possible at all.
met by a non-EU AIFM. The map shows whether
marketing is possible: (i) with or without prior
notification (i.e. a declaration of intent to market);

Key:
Possible, with or without prior notification
Possible, subject to prior authorisation
Not possible

FIN

NOR
SWE
EST

LAT

DEN
LTU
IRL

GBR
NLD

BEL GER
LUX CZE

SVK

AUT
SWI HUN
FRA
ROM

ITA
ESP

Part 3 - Marketing and Regulation

 29

WHAT IS
MEANT BY
“MARKETING”?
"Be as scientific as possible about your
value creation methodology and build a
strong pipeline that confirms the quality
and scale of your opportunity set."
James Roebuck
CLEARSIGHT

The AIFMD regulates the management and
marketing of funds. The AIFMD defines
marketing as a direct or indirect offering (i.e.
publicly) or placement (i.e. to a limited group)
of fund interests at the initiative of the AIFM
or on behalf of the AIFM to investors in the EU.
There is variation across the EU as to what
activities constitute marketing and what can
be considered “pre-marketing” (i.e. activities
that will not trigger the obligation to register
in accordance with the AIFMD). For example,
marketing may mean circulating final versions
of documents; circulating draft documents;
or hosting roadshow events setting out the
proposed terms of a fund.

Part 3 - Marketing and Regulation

 30

What is reverse solicitation?

Marketing under the AIFMD is defined as an offer or placement of interests
in a Fund at the initiative of the Manager.

The AIFMD provides that marketing is not
intended to capture investments into funds
that are made at the initiative of the investor
(referred to as reverse solicitation). As with
marketing as a whole under the AIFMD, a large
amount of latitude has been given to member
states to interpret and implement this into law.
Reverse solicitation should not be seen as
a means of side-stepping the regulations.
Interpretation of the reverse solicitation
provisions have been generally restrictive
across the EU. For instance, in the UK the
FCA has stated that to demonstrate reverse
solicitation an investor would need to confirm in
writing that it approached the Manager before
the offer or placement taking place. The FCA
has stated further that Managers should not be
able to rely on these confirmations
to circumvent the AIFMD – that is, they
should be genuine.
Raising capital for a first time fund is
difficult and doing so without proactively
approaching investors adds to this challenge.
Any attempt to rely on reverse solicitation for
a Management Group in this position should
be treated with extreme caution – it is not a
credible marketing strategy.

How do private equity investors conduct due diligence on the Management Group?
The due diligence process is time consuming but of vital importance. It is the opportunity for potential investors to investigate the Management
Group and the proposed Fund. The Management Group will have to make available a wide range of information for inspection in either a data
room or by the distribution of a pack containing the information. The potential investors will be looking for information concerning:

the analyses underlining the investment strategy the track records and backgrounds of the principals of the
of the Fund and the assumptions that have produced Management Group – including each principal’s contribution and
the projected returns the extent to which that contribution positively (or negatively) influenced
the investment performance (compared with other factors)

the intended investments of the Fund – whether broken down by

geography, industry or asset class, and the diversity of the investments the key commercial and legal terms of the Fund.

Part 3 - Marketing and Regulation

 31

How is a private equity

manager regulated?
Jurisdiction Going offshore? Extending existing
regulatory permissions

F I C AT E S
C E RT I

The regulation of the Fund and the Manager
depends on the jurisdiction in which they are
incorporated (or otherwise established) and the
jurisdictions in which they operate. Managers
operating funds within or from the UK will be
regulated by the FCA, subject to applicable
exemptions. For a Manager based in the US,
the potential extent of applicable regulation is
greater with both federal and state laws, although
there may also be applicable exemptions.
Certain offshore jurisdictions may offer a lighter
regulatory regime but many investors will prefer
that the stronger compliance standards of the
U.S. or the EU are met.
Typically, regulated activities require the
Manager to be authorised when undertaken in
or from the UK. However, there is an exemption
for overseas persons from the requirement to
be authorised, in the case of some regulated
activities. Nevertheless, the limited scope of
the exemption means that, in practical terms,
a non-UK Manager that wishes to market,
operate or otherwise arrange investments
in a fund within the UK would be required to
act by way of an authorised person or to seek
authorisation itself.
If the Manager is formed from an existing
regulated business, it may be possible to apply
to amend existing authorisations to cover the
new activities which require authorisation.
This will save time and expense compared
with an application for a new authorisation.
Consultation with the compliance consultant
will ensure that the correct authorisations can
be obtained with the minimal expense of
money and time.

Application process Can another firm’s

authorisations be used?
Authorisation
FC
A

In the UK, firms must apply to the FCA, outlining

In the UK a Manager cannot perform ‘regulated
activities’ or issue ‘financial promotions’
without authorisation or an exemption. To do
so is a criminal offence and any agreements
entered into would be unenforceable. Regulated
activities include managing an alternative
investment fund and issuing a financial
promotion. Any employees or officers of
authorised firms who carry out key functions in
that firm must also be authorised as individuals
by the FCA. A financial promotion is an invitation
or inducement to invest, issued by a UK firm
or to UK investors. Exemptions can be sought
where the investors addressed have sufficient
knowledge and understanding of the investment
to understand the risks, or meet certain criteria
for personal wealth.
the scope and type of activities for which
The FCA permits an authorised business
authorisation is sought and including a detailed
to extend its regulatory permissions to an
business plan and financial plan. This should
unauthorised firm (appointed representative)
take into account the minimum regulatory
via a regulatory umbrella.
capital that the firm must hold. The firm must
also set out the governance and structure of This is a useful way of getting a new
the firm and how it will comply with ongoing Management Group up and running. However,
regulatory requirements. it is not possible to rely on an appointed
representative relationship to manage a fund,
Finally, to demonstrate suitability, the key
only to market one or to provide investment
principals will need to be listed, along with
advice to a Manager. Therefore, this approach
their relevant experience.
has to be combined with either an offshore
As the application process can take around manager or a third party service provider (often
nine months, authorisation should be sought the principal to the appointed representative
early, in order to allow sufficient time for firm) acting as Manager.
regulated activities such as marketing before
an anticipated first close.

Part 3 - Marketing and Regulation


What is the impact of AIFMD on a
private equity manager?
The Alternative Investment Fund Managers
Directive (AIFMD) effectively came into force
on 22 July 2014. Managers who are within the
scope of the AIFMD are described as Alternative
Investment Fund Managers (AIFMs) – those
individuals or legal persons whose regular
business is the management of (one or more)
Alternative Investment Funds (AIFs) which will,
broadly speaking, include all non-UCITS funds
together with some managed accounts.
The provisions of the AIFMD are extensive
and will require careful consideration when
planning a fund and consultation with
compliance experts. Compliance with the
AIFMD is an obligation of the Manager as AIFM
rather than the Fund. In order to market a
European fund across the European Economic
Area, a manager will require a ‘passport’ to do
so – which is granted when compliance with the
AIFMD is met and maintained.
The provisions of AIFMD are applicable to the
Manager in the following circumstances:
•
it is based in the EU (although lighter regulatory
compliance is applicable to managers with
assets under management under certain
thresholds), regardless of whether the Fund,
as the AIF, is based in the EU or outside of the
EU (a “full scope AIFM”); or
•
it is based outside of the EU, but it is marketing
the Fund in the EU, regardless of whether the
Fund, as the AIF, is based in the EU or outside of
the EU (a “non-EU AIFM”).
All EU based AIFMs will be required to be
authorised and subject to supervision in their
home state. An AIF can only have one AIFM and
it must have one. Where the AIF is ‘internally
managed’ (e.g. a company that does not appoint
a manager) it will need to be authorised as
the AIFM. Under the AIFMD, managing the AIF
includes providing portfolio management and
risk management services. The provision of risk
management services has not frequently been
referred to in private equity fund agreements.
32
AIFMD
The Management Group will also need to
consider the wording of the agreements vesting
The AIFMD imposes a number of
requirements on an AIFM. The following
managerial responsibility on the Manager are a sample of the most significant
with the general partner, and the agreement •
between the Manager and an investment a minimum regulatory capital requirement
adviser, if any. If the Manager in effect delegates of at least €125,000 of the AIFM and a
managerial responsibility to an investment further amount to cover professional
adviser, then the Manager will not be the AIFM. negligence risks
There is also a lower level of compliance for •
the Manager from the requirements of the conduct of business and governance
AIFMD (a “sub-threshold AIFM”) if it manages standards which require that systems are
AIFs with aggregate assets under management in place to manage risks, conflicts
of less than: of interest and liquidity
• •
€500 million, provided that there is remuneration policies and practices in
no leverage and investors do not have place which, for senior staff, discourage
redemption rights for the first five years; or excessive risk taking
• •
€100 million including assets independent valuation procedures
acquired by leverage. for the assets of the AIF(s)
•
A Manager will have to opt-in to full compliance
restrictions on the delegation of functions
with the AIFMD if it is a sub-threshold AIFM
by the AIFM
but the Management Group wishes to take
•
advantage of the management or the marketing
greater disclosure of information
passporting provisions.
to improve transparency.
An alternative route for a European sub-
threshold AIFM is to be registered as a
European Venture Capital AIFM (“EUVECA”) or
a European Social Entrepreneurship Fund AIFM
(“EUSEF”). The principal advantage of both the
EUVECA and the EUSEF regimes is that they
permit registered managers to market their
funds across Europe with the passport (i.e. on
the same terms as a full-scope AIFM) without
having to comply with the regulations that apply
to a full-scope AIFM.
Management Groups looking to use a third
party service provider for the Manager should
note that the service provider may only do so
on a full-scope basis, and that, if appointed as
a sub-threshold AIFM, the Manager’s assets
under management may over time exceed the
thresholds (due to third parties also engaging
the Manager’s services), meaning that full
"Be flexible in considering alternative
compliance with the AIFMD will be necessary.
structures for your first fund. Investors
backing standard 10 year funds look
for a substantial track record and a
long trajectory of working as a team,
which first-time funds usually lack."
Maria Prieto, Adveq
Part 3 - Marketing and Regulation
 4
Typical Fund Terms

What are the typical

terms of the Fund? 34 - 36
 34

What are the typical

terms of the Fund?
Investment Strategy
This sets out the types of assets to be invested
in; the market sector in which to invest;
the geographic region of investment; or a
combination of all three. A credible investment
strategy will be backed by up-to-date research
and analysis.
Term of Fund
The time considered by the Management Group
to be sufficient to implement its investment
strategy and generate the target returns. A
typical term is 10 years, with extensions at the
discretion of the Manager or by agreement
of the investors. The number of extensions,
and the decision making process that leads to
them, depends on the strength of bargaining
Investment period
The investment period is the time (usually
five years) during which the Fund can make
investments. It may be extended at the
discretion of the Manager, or with the consent of
the investors. Typically, a Manager will be able
to make further drawdowns for investments for
a limited time after the end of the investment
period. The types of investments that could be

Investment Restrictions power between the Management Group and

The investment restrictions will complement
the strategy. The Management Group agrees
to limits on the composition of the portfolio to
make the Fund more commercially attractive
as an investment. Common investment
restrictions include: a limit on investment
in public companies; a minimum size for
holdings of unlisted companies (particularly for
buyout funds); and the maximum percentage
of the Fund that may be concentrated in
the investment in a portfolio company. The
investment restrictions will often be capable of
being waived by the investors or the investors
committee.
the investors. In practice, if the Fund still holds
assets at the end of its life, the Manager may be
able to agree with investors ad-hoc extensions
to the Fund’s term to maximise the best
available price, and to conduct an orderly wind-
down of the Fund.
Closings
Investors are admitted to the Fund at a closing.
There is usually a long-stop date for the
admission of investors (typically, one year after
first close), and the period between the two
dates is aptly named the commitment period.
Investors admitted at a later closing have their
commitments backdated to the first close,
made are follow-on investments (investments
into an existing portfolio company), and follow-
up investments (investments into a company for
which the Manager had reached an advanced
stage at the end of the investment period).
GP Commitment
The Management Group will often be required
to invest in the Fund to show to potential
investors that it is sufficiently self-interested
in the success of the Fund. The amount of this
investment will often range from 1.5% to 6%
of the total commitments to the Fund. For a
first fund, the Management Group may find
it difficult to secure the amounts necessary
to fund this commitment. Instead it may be

Fund Size
The PPM will often set out the target size of
the Fund, which is the total amount of investor
commitments that the Management Group will
aim to raise for the Fund. In addition, the LPA
will often state a cap on the size of the Fund.
For a first time fund, these figures will typically
be lower than for the average established
fund. When calculating these figures, the
Management Group will typically take into
account: (i) the strength of their fundraising
ability; and (ii) the investment opportunities
which are, or are likely to be, available to the
Management Group.
allowing them to participate in investments that funded by an equivalent deduction from the
management fee or the carried interest. This is
have already been made but have not yet been
disposed of. often resisted by investors, and paradoxically,
is more successfully negotiated by more
In this situation, it is common market practice
established management groups.
for investors to pay the following amounts:
•
to the existing investors, the amount necessary
to equalise the current capital contributions by
investors, excluding the amounts drawn down to
pay the management fee
•
to the existing investors, an amount equivalent
to interest on the equalising payment above
•
to the Manager, an amount equivalent to the
management fee that would have been paid to
the Manager, had that investor been admitted at
first close, plus interest on that amount.

Part 4 - Typical Fund Terms


What are the typical
terms of the Fund?
Management fee
The management fee is paid to either the
Manager or the general partner to cover the
overhead costs of operating the Fund and
making investments. It is not intended to be a
source of profit for the manager, or at least, any
suspicion that it is a source of profit rankles
investors. During the investment period the
management fee is calculated as an annual
percentage of the committed capital of the
Fund. The percentage is historically 2%, but for
larger funds of more than one billion in capital
commitments, 1.5% is more common. After the
investment period, it is generally accepted by
managers and investors that the basis of the
calculation of the management fee changes to
a percentage of the capital actually invested,
with suitable adjustments for write-downs
or write-offs of investments.
Carried interest
Carried interest is the performance incentive
for the Management Group – it is a share of the
profits (typically 20%) made from investments.
The distribution of profit is often referred to as
the waterfall. In the early years of the private
equity industry, payments of carried interest
were calculated on the realisation of each
investment – regardless of the performance of
other investments – a ‘deal-by-deal’ waterfall.
Over time, this has been modified in market
practice to take into consideration previously
realised losses and permanent write-downs
of investments – the ‘loss carry-forward’
model. A deal-by-deal arrangement is more
advantageous for the Management Group,
as they receive carried interest on profitable
realisations sooner. Investors will strongly
resist a deal-by-deal arrangement unless
provisions for clawback are provided.
35
Clawback/escrow
The clawback provisions will enable the Fund to
recover overpayments of carried interest from
the recipients within the Management Group.
As security for this, the recipients will often be
required to hold a percentage of the carried
interest in escrow for a period of time. The
clawback provisions are more keenly negotiated
where a deal-by-deal waterfall is used.
Abort costs
The Management Group will incur costs
evaluating and negotiating a proposed
investment or sale that fails to complete.
If the transaction did complete, the target
company would typically pay the costs of the
Management Group. When aborted, a well
drafted LPA will provide the Management
Group with the means to recover (through
the Manager) these costs from the Fund, but
investors often seek to cap these amounts. The
Management Group may argue in turn (albeit
with some risk) that a cap on abort costs may
create an economic incentive to complete
transactions that are actually less-than-ideal
investment opportunities in order to avoid the
Management Group bearing the abort costs
incurred over the cap.
Transaction fees
Transaction fees are paid by the portfolio
companies to the Management Group for
various services performed by the Management
Group to those portfolio companies under
a management services agreement, or an
investment agreement. Most investors believe
that transaction fees create a misalignment of
economic interests between the Management
Group and the investors. Therefore, an offset
of 100% of transaction fees received by the
Management Group against the management
fee is a typical provision in an LPA.
Part 4 - Typical Fund Terms
Key persons
Investors look to the individual members of
the Management Group, particularly in senior
leadership roles, as part of their overall due
diligence before making a commitment to the
Fund. A departure therefore of a key senior
person (especially during the investment period)
would raise a great concern with investors
about the future performance of the Fund, and
about the capability of the Management Group
to make investment decisions with a diminished
team. This can apply equally with concerns that
a key person is still a part of the Management
Group, but is no longer devoting sufficient time
to the management of the Fund. Key person
provisions establish thresholds for non-
performance that if met, trigger a suspension
of the investment period, and sometimes,
after a cure period, termination of the
investment period.
Removal of GP
The investors may remove the GP on a fault
basis (such as criminal wrongdoing, insolvency,
or serious breach of the LPA), and some LPAs
will also provide for removal of the GP on a
no-fault basis. Negotiations often take place
over the consequences of such a removal: if on
a no-fault basis, the level of Management Fee
compensation paid; and in all cases, the right
to receive Carried Interest and the treatment of
the general partner’s commitment.

What are the typical
terms of the Fund?
Management of conflicts
Over time, the Management Group (it is hoped)
will manage multiple funds with different
vintages and investment strategies. Even if
there is an overlap where investors are invested
in multiple funds of the Management Group,
there will be conflicting responsibilities to the
investors of each fund. These responsibilities
include dedicating time to the management
of the Fund (as discussed in respect of key
persons), and a responsibility to allocate the
most appropriate investments to the Fund.
The risk of conflict is reduced if the LPA
only permits raising successor funds with
similar investment strategies to the end of the
investment period or the substantial investment
of the Fund’s capital. In practice, larger groups
will have overlapping investment periods,
and allocation between the funds will be as
set out in the LPA and (often) an overarching
allocations policy.
36
Expenses
The expenses of the Fund are divided into
several categories. Organisational expenses
are generally those incurred during the
fundraising process such as travel, printing,
legal and accounting. These expenses will
usually be borne by the Fund but depending on
the complexity and size of the Fund, they may
be capped. If they are capped, the Management
Group (through the Manager) will cover the
shortfall. Other expenses are the ongoing
operational expenses of the Fund, the day to day
costs of: purchasing and holding investments;
third party expenses; and other necessary
costs. These are borne out of the capital
commitments of the investors and are typically
not capped. The Manager and the Management
Group will be expected to bear its own expenses
out of the management fees.
Part 4 - Typical Fund Terms
 5
Recommended Advisers

Recommended
Advisers 38 - 52
 38

Recommended Advisers
Placement Agents

Asante Capital Group

Core Services: Strengths: Contact Details:

Advisory Fused model – project management Warren Hibbert
• and distribution ensuring more effective/ +44 (0) 20 3696 4701
Project management efficient execution +44 (0) 79 5258 8464
• • wh@asantecapital.com
Fund placement Have raised a significant number of
25 Old Burlington Street
• first-time fund successfully – most over-
London, UK W1S 3AN
Raising of capital for initial deals subscribed, across multiple geographies
• •
Formation support Low volume of clients to ensure
each is a success

Credit Suisse Private Fund Group (“CS PFG”)

Core Services: Strengths: Contact Details:

Fully integrated global placement agent Experienced market leader: Established in Michael Murphy
and advisory group 1994, CS PFG has a proven record across all +44 (0) 20 7883 5816
• fund sizes, geographies and strategies michael.j.murphy@credit-suisse.com
Substantial project management •
London
resources in New York, London and Hong Kong Fundraising success: CS PFG has worked
to support all aspects of fundraising with clients raising over 330 funds, aggregating Kevin Naughton
• over $430 billion in capital commitments,
+1 212 538 0788
Global distribution capabilities via eight including over 80 first-time funds
kevin.naughton@credit-suisse.com
dedicated local offices •
• Full-spectrum service: Specialist teams New York
Innovative secondaries advisor providing dedicated to client due diligence, project
Thomas Swain
customised liquidity solutions management, placement and distribution,
• legal and compliance, global roadshow +852 2101 7623
Dedicated roadshow co-ordination team co-ordination, and market research thomas.swain@credit-suisse.com
Hong Kong

Part 5 - Recommended Service Providers

 39

Recommended Advisers
Placement Agents

TMR Strategic

Core Services: Strengths: Contact Details:

Advice on fund strategy Specific focus on European small end funds Tim Reid
and positioning • +44 (0) 20 3178 7611
• Particular expertise in relation to +44 (0) 7775 630236
Advice on fundraising raising first time funds and non-conventional tim.reid@tmrstrategic.com
options/solutions fund structures
23 Berkeley Square
• •
London W1J 6HE
Full fund placement services Senior attention (partner only firm)
•
Strategic advice on all key issues
affecting new managers

Acanthus

Core Services: Strengths: Contact details:

Mid-market focused private Exclusive focus on European, Wilf Wilkinson
equity fund placement specialist strategy, country-focused +44 (0)20 7317 5856
• private equity funds, so deep and wilf@acanthus.eu.com
Perform raises of both established relevant relationships, ensuring high
10-12 Blandford Stree
and emerging managers conversion rate
London W1U 4AZ
• •
London-based, serving only European Specialists in spin-out teams, first-time
fund managers, but raising capital globally funds, restructurings and successions
• •
No real estate or infrastructure – Combined project management and
only corporate PE distribution model, again leading to
• better conversion rates
Focus on primary fundraising,
with secondary activity only in support
of a primary mandate

Part 5 - Recommended Advisers

 40

Recommended Advisers
Lawyers

MJ Hudson

Core Services: Strengths: Contact Details:

Fund and management Uniquely connected in the alternatives Eamon Devlin
group structuring industry. Willing to make valuable business Managing Partner
• introductions for emerging manager clients +44 (0) 20 3203 3207
Tax structuring • +44 (0) 7970 304 542
• Seamless integration with offshore eamon.devlin@mjhudson.com
Lead negotiations with investors offices and with service providers both
8 Old Jewry
and manage the closing of the fund onshore and offshore
London, UK EC2R 8DN
• •
Regulatory advice and guidance Technical ability and depth of experience
that you would expect from the world’s
largest law firms, but do not, however,
share their overheads, their inflexibility
or aversion to change

Part 5 - Recommended Advisers

 41

Recommended Advisers
Investor Relations and Communications Advisory

Far Blue IR

Core Services: Strengths: Contact Details:

Development of key messaging and Experience working with emerging Matthew Craig-Greene
positioning strategies for fund managers managers on first and second funds and a +44 (0)20 3463 3215
• full complement of other structures matthew.craig-greene@farblueir.com
Review and redevelopment of fund marketing •
8 Old Jewry
materials PPM, pitchbook, teasers etc Deep understanding of what investors
London EC2R 8DN
• are looking for and how to communicate
Content, design and production of full with them effectively
range of investor communications and •
reporting materials Wide industry network
•
LP perception studies to provide
feedback on recent activities and to
evaluate LP appetite

The Guerin Group

Core Services: Strengths: Contact Details:

New Fund analysis resulting in optimal Fundraising materials that differentiate the Gail Guerin
strategic positioning and development of key offering and appeal to a global audience Office +1.610.526.1698
messaging to optimize fundraising • Mobile +1.610.203.6404
• Understanding of LP expectations regarding gail@thegueringroup.com
Full and Express Consulting: Marketing materials fund offerings
www.thegueringroup.com
critique, development and design including •
Pitchbooks, PPMs, DDQs, Investor Reports Access to current thinking of (and candid
• feedback from) institutional LPs globally via
Investor Perception Surveys that measure investor perception survey projects.
strength, weaknesses and competitive positioning
•
IR Program design, development and
staffing recommendations
•
First meeting strategy, presentation training

Part 5 - Recommended Advisers

 42

Recommended Advisers
Investor Relations and Communications Advisory

Foundation FS

Core Services: Strengths: Contact Details:

Develop fundraising strategy and positioning Specialist in working with Sarah Clarke
• first-time, and/ or niche funds +44 (0) 1200 447408
Create fund marketing materials and dataroom and investment strategies sclarke@foundationfs.com
• •
Communication strategy and Capacity to offer hands-on support,
presentation training fully tailored to client needs
• •
Third party referencing In-depth understanding of
• sophisticated LP universe
Project management and LP relations

Part 5 - Recommended Advisers

 43

Recommended Advisers
Administrator

Aztec

Core Services: Strengths: Contact Details:

.Managing all investor call / distribution notices Experienced in working with emerging James Duffield
• managers on first and second funds and +44 (0) 203 8180 250
Preparation and issuance of quarterly accounts a full complement of other structures james.duffield@aztecgroup.co.uk
• •
Warnford Court
Formulating and implementing detailed Deep understanding of what investors
29 Throgmorton St
compliance procedures in relation to are looking for and how to communicate
London EC2N 3AT
applicable regulatory requirements with them effectively
• •
Resolving standard investor and Staff retention rate in excess of 90%
promoter queries

Ipes

Core Services: Strengths: Contact Details:

Administration (Company Secretarial/ Ipes is a leading provider of outsourced Nigel Strachan
Accounting and Reporting/Investor Relations/ services to Private Equity in Europe +44 (0) 7700 703862
Regulatory Reporting) • nigel.strachan@ipes.com
• By understanding the challenges facing
Ipes, 1 Royal Plaza
Depositary (AIFMD Reporting) investment managers, including increasing
St Peter Port
• regulatory, reporting and investor demands,
Guernsey GY12HL
Investor Services (FATCA & CRS) they innovate by developing new services
• to help their clients succeed
Fund Governance Services (Risk Management/ •
Portfolio Management/Director Services) Every client has a dedicated support team,
which is led by a Senior Client Lead
•
Ipes uses Capital Tracker technology built with
Private Equity in mind. Capital Tracker’s SWIFT
connectivity enables straight through processing

Part 5 - Recommended Advisers

 44

Recommended Advisers
Administrator

Mainspring

Core Services: Strengths: Contact Details:

Setup of many fund structures Mainspring engages closely with fund Stephen Geddes
• management teams of first and second time +44 (0)20 3019 0900
Fund accounting funds, and gives a highly tailored service sgg@mainspringfs.com
• reflecting the requirements and style of the
8 Old Jewry
Quarterly reporting fund manager and the investors
London EC2R 8DN
• •
Fund administration Highly experienced team that administer
• many fund structures including private equity,
Custody venture capital, EIS and IHT funds (where
can act as custodian).
•
Hands on experience of investing and
operating funds ourselves and so are able
to anticipate real world problems and
devise practical solutions.

Sanne Group

Core Services: Strengths: Contact Details:

Fund Administration Sanne Group is a listed business – truly Rhea Hood
independent and our continuity provides a long-
• +44 (0) 20 3327 9717
term focus on client service rhea.hood@sannegroup.com
Depositary (necessary only for •
full scope AIFMs) Highly specialists experts operate in
• divisions focused around client asset classes
Director services of PE/RE/Debt
• •
Global reach – with 9 international offices as
SPV administration
well as further strategic alliances enabling true
cross-border services

Part 5 - Recommended Advisers

 45

Recommended Advisers
Administrator

SS&C

Core Services: Strengths: Contact Details:

All accounting & administration We own all our technology which is licensed Alex Tarantino
for the entire structure to third parties including other administrators +44 (0)20 3310 3134
• • atarantino@sscinc.com
AML on investor subscription We cater for client requirements through
and investor relations flexibility and experience
• •
Company secretarial Independent and unlikely to be bought
•
Loan services if debt fund
•
Trade services if hybrid fund

Part 5 - Recommended Advisers

 46

Recommended Advisers
Compliance

ACA

Core Services: Strengths: Contact Details:

Project management of the FCA Institutional Operational Structure Andrew Welch,
Application process supporting our consulting teams Head of European Business Development
• • +44 (0) 207 042 0500
Drafting a bespoke compliance framework Broad Client base: ACA currently provides andrew.welch@acacomplianceeurope.com
• support to more than 1,300 clients - including 53%
Panton House, 25 Haymarket
Comprehensive on-going retained of the top 100 Private Equity funds and eight of the
London SW1Y 4EN
compliance consulting top 10 (as listed in the May 2015 PEI 300)
• •
Regulatory reporting for FCA filings, International Capabilities: The team in
notifications or clearance events London combines extensive experience as
• UK regulatory consultants and includes
Independent Compliance Audit Series, former FSA and SEC examiners
iCAS - a flexible series of focused
independent reviews

Cordium

Core Services: Strengths: Contact Details:

Compliance Largest Compliance Consulting firm in the UK Sarah Donnelly, Sales Director
• with global reach providing a depth and range of sarah.donnelly@cordium.com
Financial Regulatory Accounting compliance services across FCA compliance, tax
Norfolk House,
• compliance and Financial Regulatory Reporting
31 St James’s Square
Corporate and Personal Taxation Services •
London SW1Y 4JJ
• Developed superior web-based regulatory
FCA regulatory Hosting software platforms servicing its global user
• base and supported by a dedicated in-house
Software and Training software development team
•
Aim to assist a firm throughout their journey –
from formation through to ongoing support

Part 5 - Recommended Advisers

 47

Recommended Advisers
Accountants/Audit

BDO

Core Services: Strengths: Contact Details:

Audit Externally verified as No.1 for client Vanessa Bradley (Audit)
• service for the last four years +44 (0)20 7893 2398
Tax structuring • Vanessa.Bradley@bdo.co.uk
• Holistic approach taking account
Ongoing tax compliance of all stakeholder interests Nicoletta Papademetris (Tax)
• • +44 (0)20 7893 3230
Outsourced accounting Extensive experience of negotiating and Nicoletta.Papademetris@bdo.co.uk
• agreeing valuations with HMRC
Valuations Susanna Macklin (Outsourced Accounting)
+44 (0)1473 320 750
Susanna.Macklin@bdo.co.uk

Diane Elliott (Valuations)

+44 (0)20 7893 2979
Diane.Elliott@bdo.co.uk

Grant Thornton

Core Services: Strengths: Contact Details:

Audit and financial reporting advisory Experienced in working with start-up Sam Pointon
• operations through to mature businesses +44 (0)20 7728 2167
Independent valuation services • sam.w.pointon@uk.gt.com
• Specialist private equity valuations team
Regulatory assurance reporting and • Terry Heatley
advisory services Skilled tax team with experts in the various +44 (0)20 7865 2685
• disciplines who specialise in private equity terry.j.heatley@uk.gt.com
Tax compliance and advisory
•
Transaction support services

Part 5 - Recommended Advisers

 48

Recommended Advisers
Regulatory Umbrella

Midmar Capital

Core Services: Strengths: Contact Details:

Initial consultation on FCA regulatory Each of the principals of Midmar Capital has Kevin Gallacher, Partner
requirements over 25 years’ experience in financial services +44 (0) 207 947 4436
• and has held senior fund management and +44 (0) 7815 556933
Hosting the client as an Appointed compliance positions kevin.gallacher@midmarcapital.com
Representative •
7 Stratford Place
• During the past five years, they have
London W1C 1AY
Acting as interim fund manager focused upon start-ups and can provide
(including sub-threshold AIFM if required) testimonials from a strong stable of successful 14 - 18 Hill Street
• new investment firms that they have helped Edinburgh EH2 3JZ
Managing the FCA authorisation to establish
application process
•
Ongoing compliance support

Lawson Conner

Core Services: Strengths: Contact Details:

Regulatory Hosting/Appointed Industry leading regulatory hosting Daniel Maycock
Representative Services platform approved by institutional investors +44 (0) 203 696 2560
• and pension funds dmaycock@lawsonconner.com
FCA Application Assistance •
• Extensive experience with global regulators
Ongoing FCA Compliance Support with a strong focus on risk management
• •
AIFM Manager Services Award-winning Manager platform fully
approved by institutional investors

Part 5 - Recommended Advisers

 49

Recommended Advisers
Regulatory Umbrella

Tower Gate Capital

Core Services: Strengths: Contact Details:

Appointed Representative and We are made up of qualified investment Bobby Console-Verma
full outsourced AIFM solution professionals and ex-fund and asset managers +44 (0) 203 078 8888
• and who have a solid understanding of their bobby@towergatecapital.com
Risk Management clients’ investment strategies
8 Old Jewry
• •
London EC2R 8DN
Long-term growth support and Not just a short term fix model - they
operational services provide a long term outsourcing model
• with fund management services
Ongoing training and •
compliance support Offer a full outsourcing solution so that its
• clients save considerable costs plus can
Investment strategy and provide highly respected NED’s, good corporate
structuring advice governance, strategic input, and instil
confidence in investors by offering a layer of
operational excellence

Part 5 - Recommended Advisers

 50

Recommended Advisers
Insurance Broker

Marsh

Core Services: Strengths: Contact Details:

Advisory and transactional services Design and implementation of bespoke Neill Harman
relating to directors and officers (D&O) technical policies that encompass the +44 (0)20 7357 1281
liability, professional indemnity, crime, entire organisational structure neill.d.harman@marsh.com
cyber and related insurance for •
PE & VC structures Highly-experienced insurance practitioners Rawden Leigh
• able to provide advice at each step of the +44 (0)20 7357 1209
Transactional risk insurances fund life cycle rawden.leigh@marsh.com
• •
Marsh Ltd, Tower Place East
Investee company level insurance Extensive global claims management
London EC3R 5BU
and experience

Part 5 - Recommended Advisers

 51

Recommended Advisers
Swiss Representative

Hugo Fund Services

Core Services: Strengths: Contact Details:

Swiss representative for foreign funds Alternative investments specialists who Colin Vidal
marketed to qualified investors only understand the market very well +41 22 707 41 95
• • cov@hugofunds.ch
Arrange the appointment of the paying agent Systems driven on-boarding process leading
6 Cours de Rive
• to simplified and streamlined process
1204 Geneva
Assist with documentation to reflect required •
Switzerland
legal language Leader in the Swiss representation space

Montfort

Core Services: Strengths: Contact Details:

Swiss representation for private Simplicity Roman Pelka, CEO
equity and hedge fund managers • +41 22 508 1547
• Transparency roman.pelka@montfortfunds.com
Hands on advice on Swiss fundraising •
landscape and LP universe Represent 100+ PE firms incl.
6 of top 10 global GPs

Part 5 - Recommended Advisers

 52

Recommended Advisers
Swiss Representative

ASR

Core Services: Strengths: Contact Details:

Swiss Representation of foreign Extensive experience in legal, regulatory Anne Simond
funds in Switzerland and distribution aspects within the alternative +41 22 354 2533
• investment industry anne@armswissrep.com
Assistance in asset raising in Switzerland •
Route Cite-Ouest 2
Professional, pragmatic and cost effective
1196 Gland
Switzerland

Part 5 - Recommended Advisers

 MJ Hudson was established in 2010 as the first ever boutique law firm created
to provide specialist legal advice to the alternative assets sector. Representing over
300 asset managers (GPs – private equity and venture) and 60 investors (LPs - funds
of funds, family offices and sovereign wealth funds) through the Firm’s LP Unit,
our client base is drawn from the industry it serves.

London - Paris - Jersey - Guernsey - Zurich

Eamon Devlin Benjamin Aller Karma Samdup

Managing Partner Partner Partner
eamon.devlin@mjhudson.com benjamin.aller@mjhudson.com karma.samdup@mjhudson.com
+44 (0)20 3463 3207 +33 (0)1 83 81 50 01 +44 (0)20 3463 3220

Martin Cornish Shervin Shameli Jonathan Bale

Partner Partner Advocate & Principal
martin.cornish@mjhudson.com shervin.shameli@mjhudson.com jonathan.bale@mjhudson.je
+44 (0)20 3463 3221 +44 (0)20 3463 7009 +44 (0)1534 712 911

Robert Eke Ronan McCann Hannah Daly

Associate Associate Associate
robert.eke@mjhudson.com ronan.mccann@mjhudson.com hannah.daly@mjhudson.com
+44 (0)20 3463 3203 +44 (0)20 3463 3211 +44 (0)20 3463 3211

MJ Hudson is the alternative asset law firm

 Core practice areas: Partners: Growth:
M&A 15 partners and a team of 61 MJ Hudson has experienced
• • huge growth:
Venture At least one third of our team has Past 18 months, number of MJH
• worked inside asset managers partners has almost doubled from 7 to 15
Fund Formation (eg, Credit Suisse, Man Group, 3i, and number of clients is now 389
• Coller Capital) ensuring MJ Hudson •
Secondaries fully understands alternative assets Past 18 months, team numbers have
• increased by 205% to 61
Primaries •
Past two years – opened these new
offices: Paris, Guernsey and Zurich
(in addition to London and Jersey)

Ted Craig Saloni Joshi Andrew Mills

Partner Partner Partner
ted.craig@mjhudson.com saloni.joshi@mjhudson.com andrew.mills@mjhudson.com
+44 (0)20 3463 3216 +44 (0)20 3463 3200 +44 (0)20 3463 3214

Matthew Wrigley Mark Silveira Emmanuel Amos

Group Partner Senior Associate Senior Associate
matthew.wrigley@mjhudson.com mark.silveira@mjhudson.com emmanuel.amos@mjhudson.com
+44 (0)1481 741 201 +44 (0)20 3463 3213 +44 (0)20 3693 7042

MJ Hudson is the alternative asset law firm

 London – Paris – Zürich – Jersey – Guernsey
T +44 (0)203 463 3200
www.MJHudson.com

This guide, How to Launch a Private Equity / Venture Capital Fund, is intended to provide general information about forming
a fund, which may be of interest. It is not intended to be comprehensive nor to provide any specific legal advice and should
not be acted or relied upon as doing so. Professional advice appropriate to the specific situation should always be obtained.
MJ Hudson would like to thank the advisers who inputted into this guide, who are listed at Part 5.
Special thanks to the MJH team, particularly Robert Eke.

MJ Hudson Limited, solicitors, is a limited company registered in England and Wales (no. 08607159), and is
authorised and regulated by the Solicitors Regulation Authority of England and Wales (no. 605223).
© MJ Hudson July 2016