A private equity company makes investments in the equity of private companies through various investment strategies. Equity is an asset's value minus associated liability. Private equity refers to the value of assets not traded on the stock market. These include leveraged buy outs, growth capital and venture capital. To turn a private company around and to improve its performance, the private equity company usually replaces purchased firm's top management. They also raise funds which they can invest in companies. In return, the private equity company receives a management fee and/or get a share of the company profits.

Things You Will Need

Business plan
Business name

Step 1

Get funding. Approach several interested investors and sell them on the ideas. You also may need to approach financial institutions such as banks for additional funds. It is crucial to select partners who have knowledge about the financial market, deal making, legal structures and debt management.

Step 2

Write a business plan. A business plan will help to clarify the business vision and objectives to prospective investors. This is important help get funding for your business as it will give investors information on how you plan to spend the money they will give you.

Step 3

Register the business. Select the name of the company and submit it to the Secretary of State in the state where you plan to do business. The Secretary of State will check to see if the name is available for use. Attach the company's memorandum and articles of association to your application form for registration. The articles of association contain the physical addresses, telephone number, names and details about other members in the company.

Step 4

Register for taxes.Get an Employer Identification Number from the Internal Revenue Service by filling out the SS4 form. Also, register for sales tax, which is tax charged for the sale of goods and services by the company.

Step 5

Register with the U.S. Securities and Exchange Commission. This requires that you establish formal compliance policies which outline how you intend to handle conflicts of interest. The SEC also inspects your company once you register with them.

Step 6

Recruit employees. Employ qualified personnel who are up to date with current affairs regarding the equity markets. Array

Tips & Warnings

Get a legal adviser such as an attorney to advise the company on the legal requirements of the region where you are operating.