Hedge Fund Start Up Presentation

How to Start a Hedge Fund in 2009

Below is a link to a powerpoint presentation in which I detail the background information a hedge fund manager must have prior to starting the hedge fund formation process.  The presentation is designed to familiarize a manager with the process of forming a fund while identifying potential issues which the manager should be aware of during the process.

The presentation is 18 slides long and is about 40 minutes.  I will also be posting a video here shortly.

Hedge Fund Presentation with Voice

Starting a hedge fund in 2009 (voice) (voice-over powerpoint)

For more viewing options, please see our Hedge Fund Lawyer youtube profile.

Hedge Fund Presentation without Voice
Starting a Hedge Fund

15 thoughts on “Hedge Fund Start Up Presentation

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  2. Brian

    One question, is the GP the Management Company LLC as presented on Slide 5? Does the GP hire a fund manager? Could the fund manager be an individual or another LLC?

    1. Hedge Fund Lawyer Post author

      Yes, the General Partner of the Fund is designated as the Management Company on Slide 5. Generally the GP will be the fund manager, but depending on the facts and circumstances, the GP may decide to hire an investment advisor (sometimes termed a “sub-advisor”). The investment advisor or sub-advisor may or may not be affiliated with the GP. Generally the GP/ fund manager will be an entity and not an individual. Many of my clients establish the GP/ Management Company as a single person LLC – usually they will take on the designation of Managing Director or Managing Member of the GP. Sometimes they are also called the Portfolio Manager.

  3. Tony

    I have two questions:
    - Let’s say a California-based manager formed a management company (as LLC) in Delaware and hedge fund (as LP) in Delaware that is managed/advised by the management company, does the hedge fund manager need to register in CA as foreign entities operating in CA and pay CA franchise tax for both the management company (LLC) and hedge fund (LP), ….or just for the management company (LLC) ?
    - Why is it that many hedge funds (not the management company) based in CA are structured as LP not LLC ? Is there are tax issues for structuring hedge fund as LLC vs LP?
    Thanks!

    1. Hedge Fund Lawyer Post author

      Tony,

      For the first question, as I understand from talking to my audit/CPA colleagues both the management company and fund would be required to pay the CA franchise tax if the management company is based in CA. I am not sure if all funds with management companies based in CA take that position however. This is definitely an issue the management company should discuss with the accountant/auditor.

      Generally most hedge funds are (still) established as limited partnerships. It is my understanding that there are potentially negative tax consequences for establishing a fund in CA as an LLC. This is also an issue to discuss with the accountant/auditor. Many times it will be a conversation held between the manager, lawyer and accountant.

      Hope this helps.

      Regards,
      Bart Mallon, Esq.

  4. Steve B

    Question: If I have less than 15 clients in Florida, live in FL and managed two small hedge-funds (total managed assets of less than $25MM for all of the preceding) BUT have more than 15 client accounts (some in the same family), including the two funds, but meet the De minimis threshold for each state individually, including less than 15 clients in FL, do I have to register??? (that was a mouthful!)

    I currently am registered and have been audited by FL several times with no issues, but would rather not be registered if there is no need.

    Thanks for any insights!

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