Private Equity: Productive Partnerships And Teasing Out Your Options
If you've used the pandemic to invest your nest egg, a private equity lawyer can help you manage all of your financial deals, minimize your tax burdens, and structure your investment portfolio to optimize your earning potential.
Here are some of the ways that a private equity lawyer can make your investments even more profitable.
Private equity deals can be complicated financial arrangements. Professional private equity players utilize experienced legal teams to make sure that their deals always favor them. If you go into a private equity deal without a legal team by your side, you can be left in a difficult circumstance if the deal does not pan out.
- Primary Investment Memorandum (PIM): The initial money used to fund a private equity, or PIM, changes the nature of the deal. For instance, if your PIM is not equal, the minority investor(s) in the group may have limited leverage over a private equity deal. This can make it more difficult to get your money back if you no longer want to be part of the deal. A private equity lawyer can create an addendum or charter with your PIM to create mechanisms for dissolving any investment partnerships. These documents can be critical if your private equity deal goes bad.
- Doing your Homework: Trusting someone with your money can be a recipe for disaster. One of the primary jobs of a private equity legal team is doing homework on investors. This can involve obtaining paperwork with the Security and Exchange Commission (SEC), obtaining publicly available tax documents, and looking through case logs to see if your investors have been sued before. Without this type of digging, you won't know if your money is being invested by legitimate players in the private equity world.
Teasing Out Your Options
Great private equity deals have clearly established goals and incentives to promote transparency. A private equity lawyer can help you gain leverage in a financial partnership.
- Contingencies: Some of the best private equity deals don't involve accumulating money directly. For instance, your private equity lawyer can negotiate points in exchange for influx of capital. This means that the investor won't make money directly from the deal through interest, but might make money down the road when the investment matures.
- Tax Burdens: Capital gains taxes can quickly deplete profits. A private equity lawyer can help you minimize your capital gains taxes by flipping your investments into other types of deals.
For more information, contact a company like Carter West Law firm.