Are you about starting a private equity company? If YES, here is a complete sample private equity firm business plan template & feasibility report you can use for FREE.

Okay, so we have considered all the requirements for starting a private equity firm. We also took it further by analyzing and drafting a sample private equity firm marketing plan template backed up by actionable guerrilla marketing ideas for private equity firms. So let’s proceed to the business planning section.

Why Start a Private Equity Firm?

If you are an investment banker or you have been able to grow through the ladder of the business world with a niche in investment, then you should consider starting your own private equity firm.

Private equity firms make use of their available funds or raised funds from investors with the aim of investing in underperforming companies with potentials, with the aim of repositioning the companies.

Starting this type of business does not only require huge capital base but also relevant experience in the industry. If you have not cut your teeth in the industry, you are likely not going to get investors to commit their cash in your business. Investors only invest their hard earned money with those who have track records in investment.

If you have decided to start a private equity firm, then you should must make sure that you carry out thorough feasibility studies and market survey. Business plan is yet another very important business document that you should not take for granted when launching your own business. Below is a sample private equity firm business plan template that will help you to successfully write your own.

A Sample Private Equity Firm Business Plan Template

  • Industry Overview

The Private Equity, Hedge Funds & Investment Vehicles industry is made up of Private equity funds, hedge funds, closed-end funds and unit investment trusts. This firms basically raise capital to invest in various asset classes. Industry assets have become increasingly integral to institutional investors’ portfolios and the larger asset-management market.

Institutional investors are individuals or organizations that trade securities in such substantial volumes that they qualify for lower commissions and fewer protective regulations since they are assumed to be knowledgeable enough to protect themselves. Increasing demand from institutional investors has contributed to the surge in the industry’s assets under management (AUM) and revenue over the past five years.

It is a fact that the Private Equity, Hedge Funds & Investment Vehicles industry is growing faster than most industries in the financial services sector not only in the united states but across the global market. Industry value added (IVA), a measure of the industry’s contribution to the overall economy, is projected to increase at a 6.9 percent annualized rate over the next 10 years.

Without a doubt, the Private Equity, Hedge Funds & Investment Vehicles industry is a very large and thriving not only in the developed nations, but also in developing and under developing countries of the world. Statistics has it that the Private Equity, Hedge Funds & Investment Vehicles industry in the United States of America is worth $229 billion, with an estimated growth rate of 7.3 percent between 2013 and 2018.

There are about 20,647 registered and licensed private equity firms in the United States and they are responsible for employing about 80,298 people. It is important to state that there is no company with a dominant market share in this industry.

A recent report published by IBISWorld shows that over the past five years, the Private Equity, Hedge Funds & Investment Vehicles in the US industry has grown by 7.2 percent to reach revenue of $229bn in 2018. In the same time frame, the number of businesses has grown by 2.4 percent and the number of employees has grown by 8.8 percent.

The report also shows that an increase in the regulation and taxation of private equity, hedge funds or other investment vehicles may raise their compliance costs, reduce their returns and limit the number of investment activities companies can undertake. Regulation for the Investment Management industries is expected to increase in 2018, posing a potential threat to the industry.

So also, institutional investors such as retirement and pension plans, are the largest contributors to alternative investment vehicles, such as private equity and hedge funds due to their low liquidity and high-return needs. As pension plans increase their asset levels to fund future retirement benefits, they will invest in private equity and hedge funds and boost industry revenue through asset-management fees.

Demand from retirement and pension plans is expected to increase in 2018, representing a potential opportunity for the industry. The truth is that with the rate at which private equity firms and similar businesses are growing in the United States, it means it is a business that is worth starting most especially if you have the expertise and capital.

Private Equity Firm Business Plan – Executive Summary

Thomas McKenzie® Private Equity Firm, Inc. is a registered, licensed and accredited private equity firm that will be based in Medford – Oregon.

We are well equipped to operate in the Private Equity, Hedge Funds & Investment Vehicles industry and carry out key functions that revolve around raising capital to invest in various asset classes in the United States of America. We are aware that to run a standard private equity firm can be demanding which is why we are well trained, certified and fortified.

Thomas McKenzie® Private Equity Firm, Inc. is a client – focused and result driven private equity firm that provides broad – based services. We will offer trusted and profitable services to all our clients. We will ensure that we work hard to meet and surpass our clients’ expectations whenever they invest their funds with us.

At Thomas McKenzie® Private Equity Firm, Inc., our client’s best interest would always come first, and everything we do is guided by our values and professional ethics. We will ensure that we hire professionals who are well experienced in this line of business with good track record of return on investments.

Thomas McKenzie® Private Equity Firm, Inc. will at all times demonstrate her commitment to sustainability, both individually and as a firm, by actively participating in our communities and integrating sustainable business practices wherever possible. We will ensure that we hold ourselves accountable to the highest standards by meeting our client’s needs precisely and completely.

Our plan is to position the business to become one of the leading brands in the Private Equity, Hedge Funds & Investment Vehicles industry in the whole of Medford, and also to be amongst the top 20 private equity firms in the United States of America within the first 10 years of operation.

This might look too tall a dream but we are optimistic that this will surely be realized because we have done our research and feasibility studies and we are confident that Oregon is the right place to launch our business before expanding to other cities in the United States of America.

Thomas McKenzie® Private Equity Firm, Inc. is owned and managed by Thomas McKenzie. Thomas McKenzie has a Degree in Business Administration from Northern Michigan University; MBA in Economics from Columbia Business School. Investing is a family trait that Thomas McKenzie inherited from his father, a stockbroker and U.S. congressman.

At the age of 13, Thomas McKenzie made his first investment, and by the age of 13 he was selling horse racing tip sheets and operating a paper delivery service. Thomas McKenzie has over 18 years’ experience working at various capacities in the Private Equity, Hedge Funds & Investment Vehicles industry in the United States of America.

  • Our Product and Services Offerings

Thomas McKenzie® Private Equity Firm, Inc. is going to offer varieties of services within the Private Equity, Hedge Funds & Investment Vehicles industry in the United States of America. We are prepared to make profits from the industry and we will do all that is permitted by the law in the United States to achieve our business goals. Our business offerings are listed below;

  • Private equity funds
  • Hedge funds
  • Closed-end funds
  • Unit investment trusts
  • Trade in financial products
  • Related investment consulting and advisory services

Our Vision Statement

Our vision is to build a private equity brand that will become one of the top choices for investors in the whole of Medford – Oregon. We want to be known for professionalism and outstanding results.

  • Our Mission Statement

Our mission is to position the business to become one of the leading brands in the Private Equity, Hedge Funds & Investment Vehicles industry in the whole of Medford, and also to be amongst the top 20 private equity firms in the United States of America within the first 10 years of operation.

  • Our Business Structure

The truth is that it won’t be out of place if we decide to settled for two or three staff members, but as part of our plan to build a standard private equity firm, we have perfected plans to get it right from the beginning which is why we are going to hire qualified, competent, honest and hardworking employees to occupy all the available positions in our firm.

The picture of the kind of the private equity firm we intend building and the business goals we want to achieve is what informed the amount we are ready to pay for the best hands in Oregon and environs as long as they are willing to work with us. Below is the business structure that we will build Thomas McKenzie® Private Equity Firm, Inc.;

  • Chief Executive Officer
  • Private Equity Consultants/Investor Specialists
  • Admin and HR Manager
  • Risk Manager
  • Marketing and Sales Executive
  • Chief Financial Officer (CFO)/Chief Accounting Officer (CAO).
  • Customer Care Executive/Front Desk Officer

Roles and Responsibilities

Chief Executive Office:

  • Increases management’s effectiveness by recruiting, selecting, orienting, training, coaching, counseling, and disciplining managers; communicating values, strategies, and objectives; assigning accountabilities; planning, monitoring, and appraising job results
  • Responsible for fixing prices and signing business deals
  • Responsible for providing direction for the business
  • Creates, communicates, and implementing the organization’s vision, mission, and overall direction – i.e. leading the development and implementation of the overall organization’s strategy.
  • Responsible for signing checks and documents on behalf of the company
  • Evaluates the success of the organization

Private Equity Consultants/Investor Specialist

  • Provides market research and implementing new investment product and strategies
  • Create research and review platforms for new, existing and potential investment products
  • Exceed client expectations with returns on investments
  • Works closely with analysts and traders to ensure trading strategy is carried out correctly
  • Construct and review performance reports to show to investors
  • Performs due diligence visits and assessing investment management firms and quantitatively analyzing investment pools

Risk Manager

  • Plans, designs and implements an overall risk management process for the organization
  • Performs risk evaluation which involves comparing estimated risks with criteria established by the organization such as costs, legal requirements and environmental factors, and evaluating the organization’s previous handling of risks;
  • Establishes and quantifies the organization’s ‘risk appetite’, i.e. the level of risk they are prepared to accept;
  • Performs risks reporting in an appropriate way for different audiences, for example, to the board of directors so they understand the most significant risks
  • Carries out processes such as purchasing insurance, implementing health and safety measures and making business continuity plans to limit risks and prepare for eventualities
  • Conducts audits of policy and compliance to standards, including liaison with internal and external auditors;
  • Provides support, education and training to staff to build risk awareness within the organization.

Admin and HR Manager

  • Responsible for overseeing the smooth running of HR and administrative tasks for the organization
  • Designs job descriptions with KPI to drive performance management for clients
  • Maintains office supplies by checking stocks; placing and expediting orders; evaluating new products.
  • Ensures operation of equipment by completing preventive maintenance requirements; calling for repairs.
  • Defines job positions for recruitment and managing interviewing process
  • Carries out induction for new team members
  • Responsible for training, evaluation and assessment of employees
  • Responsible for arranging travel, meetings and appointments
  • Oversees the smooth running of the daily office activities.

Marketing/Investor Relations Officer

  • Identifies prioritizes, and reaches out to new partners, and business opportunities et al
  • Identifies development opportunities; follows up on development leads and contacts
  • Responsible for handling business research, marker surveys and feasibility studies
  • Documents all customer contact and information
  • Represents the company in strategic meetings
  • Help to increase growth for the company

Chief Financial Officer (CFO)/Chief Accounting Officer (CAO)

  • Responsible for preparing financial reports, budgets, and financial statements for the organization
  • Prepares the income statement and balance sheet using the trial balance and ledgers prepared by the bookkeeper.
  • Provides managements with financial analyses, development budgets, and accounting reports
  • Responsible for financial forecasting and risks analysis
  • Performs cash management, general ledger accounting, and financial reporting for one or more properties
  • Responsible for developing and managing financial systems and policies
  • Responsible for administering payrolls
  • Ensures compliance with taxation legislation
  • Handles all financial transactions for the company
  • Serves as internal auditor for the company

Client Service Executive/Front Desk Officer

  • Welcomes guests and clients by greeting them in person or on the telephone; answering or directing inquiries.
  • Ensures that all contacts with clients (e-mail, walk-In center, SMS or phone) provides the client with a personalized customer service experience of the highest level
  • Through interaction with clients on the phone, uses every opportunity to build client’s interest in the company’s services
  • Consistently stays abreast of any new information on the company’s products, promotional campaigns etc. to ensure accurate and helpful information is supplied to clients
  • Receives parcels/documents for the company
  • Distribute mails in the organization
  • Handles any other duties as assigned by the line manager

Private Equity Firm Business Plan – SWOT Analysis

Thomas McKenzie® Private Equity Firm, Inc. engaged the services of a professional in the area of business structuring to assist our organization in building a well – structured private equity firm that can favorably compete in the industry.

Part of what the business consultant did was to work with the management of our organization in conducting a SWOT analysis for Thomas McKenzie® Private Equity Firm, Inc. Here is a summary from the result of the SWOT analysis that was conducted on behalf of Thomas McKenzie® Private Equity Firm, Inc.;

  • Strength:

Our core strength lies in the power of our team; our workforce. We have a team that can give our clients good returns on their investment; a team that are trained and equipped to pay attention to details and to deliver excellent jobs. We are well positioned and we know we will attract loads of clients from the first day we open our doors for business.

  • Weakness:

As a new private equity firm, it might take some time for our organization to break into the market and gain acceptance especially from corporate clients in the already saturated Private Equity, Hedge Funds & Investment Vehicles industry, that is perhaps our major weakness. So also we may not have the required cash to give our business the kind of publicity we would have loved to.

  • Opportunities:

The opportunities in the Private Equity, Hedge Funds & Investment Vehicles industry is massive considering the number of investors and small businesses who would need investment support from private equity firms to grow their businesses and increase their profits. As a standard and accredited private equity firm, we are ready to take advantage of any opportunity that comes our way.

  • Threat:

Private equity services involve a large amount of cash and it is known to be a very high risk venture, hence whoever chooses to manage it must not just have solid investment background, but must also know how to handle risks and discover potential thriving businesses and opportunities. The truth is that if you are not grounded in risks management as a private equity, you may likely throw away peoples’ monies.

Just as in any other business and investment vehicles, regulations, tax, economic downturn, unstable financial market and unfavorable government economic policies can hamper the growth and profitability of private equity firms.

Private Equity Firm Business Plan – MARKET ANALYSIS

  • Market Trends

A close observation of happenings in the industry shows that in the dawn of recessionary declines, the industry is expected to continue on a path to growth, but not without a few ups and downs.

As a result of this trend, Private Equity, Hedge Funds & Investment Vehicles industry revenue is expected to grow over the five-year period at an annualized rate of 7.3 percent. The revenue growth for the industry was restrained in the early part of the period as the industry was reluctant to bounce back from the financial crisis and subsequent recession of the prior period that caused stock markets and business activity to dramatically contract in the United States.

The nature of private equity investment requires the services of core investment professionals. As a matter of fact, before any investor can commit their hard earned money under your care as a hedge fund manager, they usually would want to know your profile.

On the average, private equity firms employ strategies that can help them reduce market risk specifically by shorting equities or through the use of derivatives. This is why many investment strategies, mostly arbitrage strategies, are limited as to how much capital they can successfully employ before returns starts diminishing. Little wonder most successful fund managers place limit on the amount of capital they will accept per time.

  • Our Target Market

Private equity is simply an investment medium that enables big time accredited investors pool cash or capital together to be able to invest in securities and any other form of investment opportunity that requires large initial capital to invest.

The fact that hedge funds requires large capital makes it easier for only the rich and accredited investors to cash in on it. Hedge funds are only open to limited partners with the required cash for investing in capital intensive business portfolios.

Our target market cuts across businesses and investors that are willing to invest. We are coming into the industry with a business concept that will enable us produce good returns on investment for our clients. Below is a list of the individuals and organizations that we have specifically designed our services for;

  • Accredited Investors
  • Wealthy People in the Society
  • Investment Clubs
  • Top corporate executives
  • Corporate Organizations / Blue Chip Companies
  • Small and medium scales businesses
  • Startups

Our competitive advantage

Despite the fact that private equity investment strategies give huge returns on investment, it is indeed risky venture. For you to survival as a private equity firm, you should be able to come up with workable investment strategies; strategies that will help you attract the required cash/capital and above all you should be a good risk manager and one that can spot a potential thriving business from afar.

We are quite aware that to be highly competitive in the industry means that we should be able to give good returns on investments to our clients, turn around the fortunes of a dying company for good, spot potential successful business ideas and invest in them, deliver consistent quality service, our clients should be satisfied with our investment strategies and we should be able to meet the expectations of our clients.

Thomas McKenzie® Private Equity Firm, Inc. might be a new entrant into the Private Equity, Hedge Funds & Investment Vehicles industry in the United States of America, but their management staff are highly qualified portfolio management experts in the United States. These are part of what will count as a competitive advantage for us.

Lastly, our employees will be well taken care of, and their welfare package will be among the best within our category in the industry, meaning that they will be more than willing to build the business with us and help deliver our set goals and achieve all our aims and objectives.

Private Equity Firm Business Plan – SALES AND MARKETING STRATEGY

As a business that aims to stay at the top of our game and generate consistent income, our sales and marketing team will be recruited base on their vast experience in the industry and they will be trained on a regular basis so as to be equipped to meet the overall goal of the organization. We will also ensure that our return on investment and excellent job deliveries speaks for us in the market place.

Our goal is to grow our private equity firm to become one of the top 20 private equity firms in the United States of America which is why we have mapped out strategies that will help us take advantage of the available market and grow to become a major force to reckon with not only in the Medford but also in other cities in the United States of America.

Thomas McKenzie® Private Equity Firm, Inc. is set to make use of the following marketing and sales strategies to attract clients;

  • Introduce our business by sending introductory letters alongside our brochure to corporate organizations, startups, accredited investors, entrepreneurs and key stake holders in Medford and other cities in the United States
  • Advertise our business in relevant financial and business related magazines, newspapers, TV and radio stations.
  • List our business on yellow pages’ ads (local directories)
  • Attend relevant international and local finance and business expos, seminars, and business fairs et al
  • Create different packages for different category of clients in order to work with their budgets and still deliver good returns on investment
  • Leverage on the internet to promote our business
  • Engage direct marketing approach
  • Encourage word of mouth marketing from loyal and satisfied clients

Sources of Income

Thomas McKenzie® Private Equity Firm, Inc. is established with the aim of maximizing profits in the Private Equity, Hedge Funds & Investment industry and we are going to ensure that we do all it takes to attract clients on a regular basis. Thomas McKenzie® Private Equity Firm, Inc. will generate income by offering the following investment related services;

  • Private equity funds
  • Hedge funds
  • Closed-end funds
  • Unit investment trusts
  • Trade in financial products
  • Related investment consulting and advisory services

Sales Forecast

One thing is certain, there would always be accredited investors, small and medium scale businesses and wealthy individuals who would need the services of tested and trusted private equity firms.

We are well positioned to take on the available market in Medford and other key cities in the United States of America and we are quite optimistic that we will meet our set target of generating enough profits from our first six months of operation and grow the business and our clientele base.

We have been able to examine the Private Equity, Hedge Funds & Investment industry, and we have analyzed our chances in the industry and we have been able to come up with the following sales forecast.

Below is the sales projection for Thomas McKenzie® Private Equity Firm, Inc., it is based on the location of our business and the wide range of investment management services that we will be offering;

  • First Fiscal Year: $750,000
  • Second Year: $ 1.5 Million
  • Third Year: $3 Million

N.B: This projection was done based on what is obtainable in the industry and with the assumption that there won’t be any major economic meltdown and there won’t be any major competitor offering same services as we do within same location. Please note that the above projection might be lower and at the same time it might be higher.

Private equity firms are known to generate income from various investment portfolios hence there are no pricing models for this type of business. But on the other hand, they tend to negotiate with their financial partners on percentage whenever they invest their hard earned money in an investment vehicle handled by a private equity firm.

At Thomas McKenzie® Private Equity Firm, Inc. we will ensure that we give good returns on investment (ROI) and always maximize profits for the business.

  • Payment Options

At Thomas McKenzie® Private Equity Firm, Inc. our payment policy is going to be all inclusive because we are quite aware that different members prefer different payment options as it suits them but at the same time, we will ensure that we abide by the financial rules and regulation of the United States of America.

Here are the payment options that Thomas McKenzie® Private Equity Firm, Inc. will make available to her members;

  • Payment via bank transfer
  • Payment via online bank transfer
  • Payment via mobile money
  • Payment via check
  • Payment via bank draft

In view of the above, we have chosen banking platforms that will enable our members make payment for their service charges monthly and investment stake without any stress on their part. Our bank account numbers will be made available on our website and promotional materials.

Private Equity Firm Business Plan – Publicity and Advertising Strategy

The uniqueness of this industry is such that it is the result they produce that helps boost their awareness. Private equity firms are strategic when it comes to inviting investors to invest in a project or when it comes to acquiring a struggling company.

It will be out of place to boost your private equity firm if you have not proven your worth in the industry. If you have successfully proven that you have what it takes to operate a successful private equity firm, then you next port of call is to strategically engage the media to help you promote your brand and also create a positive corporate identity.

We have been able to work with our brand and publicity consultants to help us map out publicity and advertising strategies that will help us walk our way into the heart of our target market. We are set to take the industry by storm which is why we have made provisions for effective publicity and advertisement of our private equity firm.

Below are the platforms we intend to leverage on to promote and advertise Thomas McKenzie® Private Equity Firm, Inc.;

  • Place adverts on both print (community based newspapers and magazines) and electronic media platforms
  • Sponsor relevant community based events/programs
  • Leverage on the internet and social media platforms like; Instagram, Facebook, twitter, YouTube, Google + et al to promote our brand
  • Install our billboards on strategic locations all around Medford.
  • Distribute our fliers and handbills in target areas
  • Ensure that all our workers wear our branded shirts and all our vehicles are well branded with our company’s logo.

Private Equity Firm Business Plan – Financial Projections and Costing

The cost of starting a private equity firm is in the two fold; the cost of setting up the office structure and the capital meant for investment. The amount required to invest in this line of business can range from 1 million US dollars to even multiple millions of dollars. So you must employ aggressive strategies to pool such cash together.

As regards the cost of setting up the office structure, your concern should be to secure a good office facility in a busy business district; it can be expensive though, but that is one of the factors that will help you position your firm to attract the kind of investors you would need.

This is the financial projection and costing for starting Thomas McKenzie® Private Equity Firm, Inc.;

  • The total fee for incorporating the Business – $750.
  • The budget for basic insurance policy covers, permits and business license – $2,500
  • The Amount needed to acquire a suitable office facility in a business district 6 months (Re – construction of the facility inclusive) – $40,000.
  • The cost for equipping the office (computers, software applications, printers, fax machines, furniture, telephones, filing cabins, safety gadgets and electronics et al) – $5,000
  • The cost for purchase of the required software applications (CRM software, Accounting and Bookkeeping software and Payroll software et al) – $10,500
  • The Cost of Launching your official Website – $600
  • Budget for paying at least three employees for 3 months plus utility bills – $10,000
  • Additional Expenditure (Business cards, Signage, Adverts and Promotions et al) – $2,500
  • Investment fund – $1 Million Dollars
  • Miscellaneous: $1,000

Going by the report from the market research and feasibility studies conducted, we will need $150,000 excluding $1M investment capital to successfully set up a medium scale but standard private equity firm in the United States of America.

Generating Startup Capital for Thomas McKenzie® Private Equity Firm, Inc.

Thomas McKenzie® Private Equity Firm, Inc. is owned and managed by Thomas McKenzie. He decided to restrict the sourcing of the startup capital for the business to just three major sources.

  • Generate part of the startup capital from personal savings
  • Source for soft loans from family members and friends
  • Apply for loan from the bank

N.B: We have been able to generate about $50,000 (Personal savings $40,000 and soft loan from family members $10,000) and we are at the final stages of obtaining a loan facility of $100,000 from our bank. All the papers and documents have been duly signed and submitted, the loan has been approved and any moment from now our account will be credited.

PRIVATE EQUITY BUSINESS GROWTH: Sustainability and Expansion Strategy

The future of a business lies in the number of loyal customers that they have, the capacity and competence of their employees, their investment strategy and business structure. If all these factors are missing from a business, then it won’t be too long before the business close shop.

One of our major goals of starting Thomas McKenzie® Private Equity Firm, Inc. is to build a business that will survive off its own cash flow without the need for injecting finance from external sources once the business is officially running. We know that one of the ways of gaining approval and winning customers over is to give investors good returns on their investments.

We will make sure that the right foundation, structures and processes are put in place to ensure that our staff welfare are well taken of. Our company’s corporate culture is designed to drive our business to greater heights and training and retraining of our workforce is at the top burner of our business strategy.

As a matter of fact, profit-sharing arrangement will be made available to all our management staff and it will be based on their performance for a period of three years or more as determined by the board of the organization. We know that if that is put in place, we will be able to successfully hire and retain the best hands we can get in the industry; they will be more committed to help us build the business of our dreams.

Check List/Milestone

  • Business Name Availability Check: Completed
  • Business Incorporation: Completed
  • Opening of Corporate Bank Accounts: Completed
  • Opening Online Payment Platforms: Completed
  • Application and Obtaining Tax Payer’s ID: In Progress
  • Application for business license and permit: Completed
  • Purchase of Insurance for the Business: Completed
  • Securing a standard office facility in Medford – Oregon: Completed
  • Conducting Feasibility Studies: Completed
  • Generating part of the startup capital from the founder: Completed
  • Applications for Loan from our Bankers: In Progress
  • Writing of Business Plan: Completed
  • Drafting of Employee’s Handbook: Completed
  • Drafting of Contract Documents: In Progress
  • Design of The Company’s Logo: Completed
  • Printing of Promotional Materials: Completed
  • Recruitment of employees: In Progress
  • Purchase of software applications, furniture, office equipment, electronic appliances and facility facelift: In progress
  • Creating Official Website for the Company: In Progress
  • Creating Awareness for the business (Business PR): In Progress
  • Health and Safety and Fire Safety Arrangement: In Progress
  • Establishing business relationship with vendors and key players in the industry: In Progress