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