Bridger PenningtonFund Launch & Investment Expert

PRIVATE EQUITY FUND STRUCTURES

6 Feb 2025 · 1 min

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Private equity funds work through limited partnerships where investors (LPs) give money to a manager (GP) who buys companies, restructures them, and sells them. The GP takes a cut of profits called carried interest, which is how fund managers actually make money.

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to talk about private equity fund structure. 99% of all money comes through this structure. Your LPs, you'll kind of hear that terminology, I have my LPs, that they mean investors, put money into the limited partnership. The limited partnership is a pool of money that you as the general partner right here can pull from that pool of money and go make investments. For private equity companies, they're usually buying and selling businesses. And they go buy these companies and depending on the private equity fund and how they want to do it, sometimes they will kick out the management teams and they keep them. And maybe one day they IPO. Maybe one day they sell them to a bigger private equity company. And what happens is when these investments make money down here, the money flows up to the limited partnership, to the limited partners, and the general partner takes a piece of that. And that's how these fund managers make so much money.