Free Private Equity Firm Business Plan
For Raising Capital from Investors, Banks, or Grant Companies!
Please note that the financials
in this complete free business plan are completely fictitious and may not
match the text of the business plan below. This free business plan demonstration
purposes only. If you are interested in purchasing the completed editable MS Word
and Excel documents for this business plan, please click the button below! Also,
the text of the business plan is formatted with a fully automated
table of contents.
It should be noted that there is no special software required to use these
templates. All business plans come in Microsoft Word and Microsoft Excel format.
Each business plan features:
- Excecutive Summary
- Company and Financing Summary
- Products and Services Overview
- Strategic Analysis with current research!
- Marketing Plan
- Personnel Plan
- 3 Year Advanced Financial Plan
- Expanded Financial Plan with Monthly Financials
- FREE 30 Page Sample Private Placement Memorandum
- FREE PowerPoint Presentation for Banks, Investors,
or Grant Companies!
- All plans are updated for 2013!
1.0 Executive Summary
The purpose of this business plan is to raise $10,000,000 for the development of a private equity firm while showcasing the expected financials and operations over the next three years. The Private Equity Firm Inc. (“the Company”) is a New York based corporation that will provide investment management for its investors in its targeted market. The Company was founded in 2008 by John Doe.
1.1 Products and Services
The Private Equity Firm will solicit capital from accredited investors (defined later) with the intent to use this capital to make investments into startups, established businesses, hedge funds, and real estate ventures. The Company expects to generate compounded annual returns of 25% to 35% per year on capital invested into the Private Equity Firm’s portfolio holdings. The Management of the Private Equity Firm will retain a 20% ownership interest in the firm. Details of the fee arrangements for the Private Equity Firm can be found in the Company’s private placement memorandum. The third section of the business plan will further describe the investment management services offered by the Private Equity Firm.
1.2 The Financing
At this time, the Company is seeking to raise $10,000,000 for the development of the Private Equity Firm’s operations. Mr. Doe is seeking to sell an 80% ownership interest in the business in exchange for this capital. 85% of the invested capital will be used for direct investments into the firm’s portfolio companies.
1.3 Mission Statement
Management’s mission is to develop the Private Equity Firm into a large scale investment firm that develops and expands economically viable businesses that will provide dividend income, capital appreciation, and interest income to the Company’s investors and senior directors.
1.4 Mangement Team
The Company was founded by John Doe. Mr. Doe has more than 10 years of experience in the investment management industry. Through his expertise, he will be able to bring the operations of the business to profitability within its first year of operations.
1.5 Sales Forecasts
Mr. Doe expects a strong rate of growth at the start of operations. Below are the expected financials over the next three years.
1.6 Expansion Plan
The Company will to undergo an aggressive expansion after the successful completion of the initial capital raising period. As the Private Equity Firm is a multifaceted investment firm, Management will expand each segment of the business by developing limited partnerships that will attract additional capital for the Company’s venture capital, marketable securities, and real estate portfolios.
2.0 Company and Financing Summary
2.1 Registered Name and Corporate Structure
Private Equity Firm, Inc. The Company is registered as a corporation in the State of New York.
2.2 Required Funds
At this time, the Private Equity requires $10,000,000 of equity funds. Below is a breakdown of how these funds will be used:
2.3 Investor Equity
At this time, Mr. Doe is seeking to sell an 80% interest in the private equity firm in exchange for the capital sought in this business plan. Please reference the Company’s private placement memorandum regarding more information regarding the Company’s fee and ownership structure.
2.4 Management Equity
John Doe currently owns 100% of the Private Equity Firm, Inc.
2.5 Exit Strategy
The Management has planned for three possible exit strategies. The first strategy would be to sell the Company to a larger entity at a significant premium. Since, the financial management and private equity industry maintains a very low risk profile once the business is established; the Management feels that the Company could be sold for ten to fifteen times earnings.
3.0 Products and Services
Below is a description of the investment management services offered by the Private Equity Firm.
3.1 Private Investments into Startups and Medium Sized Businesses
The primary revenue generating center for the Private Equity Firm will come from capital investments (both loans and equity) into startups with proprietary technology and medium sized businesses with an established operating history. The Company anticipates that investments into startups and medium sized businesses will yield a 30% to 50% compounded return on investment. As part of the Company’s operating procedure, a through due diligence process will be completed before a business becomes a partner/portfolio company/joint venture with the Private Equity Firm. At the onset of operations, Mr. Doe will hire several skilled research analysts and structured finance experts (in both an employment and consulting capacity) to ensure that each transaction is structured so that the business receives a large return on investment without an undue risk exposure.
3.2 Real Estate Investments
In addition to private investments and marketable securities, the Company will also directly and indirectly purchase real estate, as Management feels that the low prices within the market represent substantial buying opportunities. Many economists are currently predicting that the housing market correction is nearing its end, and the Company could be in an excellent position to purchase large apartment complexes, industrial facilities, and commercial (Class A and Class B) properties that produce substantial rent rolls. The business could easily use its existing cash reserves to directly purchase real estate with the intent to refinance the properties at a later time. Since real estate often produces strong returns (over the long run), the expected ROI from these investments could easily reach 25% to 35% per year depending on the specific geographic region where the Private Equity Firm places its capital.
4.0 Strategic and Market Analysis
4.1 Economic Outlook
This section of the analysis will detail the economic climate, the investment management industry, the customer profile, and the competition that the business will face as it progresses through its business operations. Currently, the economic market condition in the United States is moderate. The meltdown of the sub prime mortgage market coupled with increasing gas prices has led many people to believe that the US is on the cusp of an economic recession. This slowdown in the economy has also greatly impacted real estate sales, which has halted to historical lows.
4.2 Industry Analysis
The financial services sector has become one of the fastest growing business segments in the U.S. economy. Computerized technologies allow financial firms to operate advisory and brokerage services anywhere in the country. In previous decades, most financial firms needed to be within a close proximity to Wall Street in order to provide their clients the highest level of service. This is no longer the case as a firm can access almost every facet of the financial markets through Internet connections and specialized trading and investment management software. With these advances, several new firms have been created to address the needs of people in rural and suburban areas. The Bureau of Labor Statistics estimates that there are approximately 94,000 investment advisors currently employed throughout the United States. The average annual income for an investment advisor is $62,700. Salaries are expected to increase at a rate of 2.1% a year as inflation increases.
4.3 Customer Profile
Private equity funds and venture capital groups have a very limited scope of people to which they can market their investment portfolio. This is especially true for the Private Equity Firm as the Company will use marketable securities as part of its day to day revenue generating activities. Unfortunately, this business (for its investors) caters only to high net worth individuals that have an aggregate income of over $200,000 (if single) or $300,000 (if the client is married) or a net worth of at least one million dollars. Strict regulatory oversights prevent the Company from marketing the hedge fund to anyone that is not considered an accredited investor. These regulations may become more stringent as the Securities and Exchange Commission moves to have greater regulatory oversight over the hedge fund industry.
4.4 Competitive Analysis
As the investment advisory and hedge fund industries have grown, so has the level of competition. One of the drawbacks to the industry is that there are very low barriers to entry. Any individual or business may register itself as an investment advisor after completing the proper examinations and filings. The expected costs to build an investment advisory are low as it is a service oriented business. There are more than 8,000 other private investment groups that operate in a similar capacity.
5.0 Marketing Plan
The Private Equity Firm intends to maintain an extensive marketing campaign that will ensure maximum visibility for the business in its targeted market. Below is an overview of the marketing strategies and objectives of the Private Equity Firm.
5.1 Marketing Objectives
• Develop an online presence by developing a website and placing the Company’s name and contact information with online directories.
• Establish relationships with other investment advisories within the United States.
5.2 Marketing Strategies
As the Company cannot directly market its services to the general public, the Private Equity Firm will hire a capital introduction firm to showcase the operations of the business to potential investors. These firms, for a commission, will introduce potential investors and investment groups to Management. These companies maintain extensive lists of accredited investors and institutions that frequently make investments into private investment companies. The Company will also market itself to startups and established medium sized businesses that are seeking to raise $5,000,000 to $15,000,000. The Company will develop a website that showcases the criteria that the business seeks among its portfolio business. This website, its web address, and contact information will be listed among networks of websites that bring potential funding sources together with portfolio companies. This website will also have a portal for confirmed accredited investors to learn more about the Company’s operations and its investments.
In this section, describe the pricing of your services and products. You should provide as much information as possible about your pricing as possible in this section. However, if you have hundreds of items, condense your product list categorically. This section of the business plan should not span more than 1 page.
6.0 Organizational Plan and Personnel Summary
6.1 Corporate Organization
6.2 Organizational Budget
6.3 Management Biographies
In this section of the business plan, you should write a two to four paragraph biography
about your work experience, your education, and your skill set. For each owner or
key employee, you should provide a brief biography in this section.
7.0 Financial Plan
7.1 Underlying Assumptions
• The Company will earn a compounded annual return of 30% on its investment portfolio.
• The Owner will acquire $10,000,000 of equity funds to develop the business.
• The Private Equity Firm will have an annual revenue growth rate of 16% per year.
7.2 Sensitivity Analysis
It is the goal of the Company to make investments in economically viable companies that will produce dividend income, interest income, and capital appreciation. During times of economic recession, the Company’s portfolio businesses may have issues with profit generation, which in turn, could lead to lower ROI’s on the business’s portfolio. However, the Company intends to use a number of investment strategies that will ensure that the firm will produce profits regardless of the general economic climate.
7.3 Source of Funds
7.4 General Assumptions
7.5 Profit and Loss Statements
7.6 Cash Flow Analysis
7.7 Balance Sheet
7.8 General Assumptions
7.9 Business Ratios
Expanded Profit and Loss Statements
Expanded Cash Flow Analysis