As a founder of the fund, you will be a general partner, meaning that you will have the right to decide the investments that compose the fund.
Your investors will be limited partners who don't have the right to decide which companies are part of your fund.
Meanwhile, there are several business focuses you could adopt.
Will your fund aim to improve your portfolio companies' operational or strategic focus, or will this center entirely on cleaning up their balance sheets?
For example, is the aim of the investment to grow capital for mergers and acquisitions activity?
Or is the goal to raise capital that will allow existing owners to sell their positions in the firm?
The second step is to write a business plan, which calculates cash flow expectations, establishes your private equity fund's timeline, including the period to raise capital and exit from portfolio investments.
Each fund typically has a life of 10 years, although ultimately timelines are up to the manager's discretion.
After early operations are in order, establish the fund’s legal structure.
In the United States, a fund typically assumes the structure of a limited partnership or a limited liability firm.