Accounting for Funds: Private Equity
What you'll learn
- Understand the difference between private equity and hedge funds
- Learn common fund structures
- Understand the economics of private equity
- Comprehend key concepts of private equity accounting
- Calculate management and performance fee
- Calculate net asset value (NAV)
- Understand capital activities in fund accounting
- Basic to intermediate understanding of general accounting
- Basic to intermediate understanding of U.S. GAAP
- Basic understanding of finance
- Basic understanding of capital markets
In this course we explore private equity funds as an alternative asset class. We look at key concepts about fund formation, fund economics (i.e. how funds make money), key participants in fund activities, and the financial reporting process. Also, we pay close attention to how management and performance fees are calculated, as well as NAV.
Furthermore, we use an example of EducAfrica Asset Management (fictitious private equity firm), to show the typical fund structures, main actors in the fund organization and operation, deal sourcing process, underwriting approach, and general deal flow. Nonetheless, a great portion of the course is dedicated to explaining key journal entries and how they impact the financial statements.
Below follows the course outline:
Funds key concepts (i.e. private equity, hedge fund)
Difference between a private equity and a hedge fund
How private equity funds are set-up (stand alone fund, master-feeder, parallel, etc.)
Legal entities and preferable jurisdictions
Team members and service providers (management, advisory board, attorneys, accountants, fund administrator, custodian, etc.)
Key accounting concepts (statement of assets and liabilities, statement of activities, schedule of investments, members/partners equity)
Capital activities (capital call ad redemptions)
Operating expense schedule
Management and performance fees calculation
Net asset value calculation
At the end of this course, students should be able to comprehend the process of private equity formation, their economics and operations, as well as financial reporting for this asset class.
Who this course is for:
- Accountants seeking to learn new areas of accounting
- Fund managers (i.e., hedge fund or private equity)
- Emerging fund managers
- Individuals seeking to launch real estate funds
- Venture capital principals
- Fund principals
Luntadila Paulo, an immigrant from Angola, is a pan-African, global citizen, and entrepreneur. He founded Yeto Accounting and Tax PLLC in 2019 to help small business owners minimize their tax burden legally and ethically while assisting them in building their net worth. Since then, Paulo has helped hundreds of taxpayers save money on taxes, gain confidence with their finances, start a journey to build wealth, and lead a life free of fear of the IRS.
Paulo’s professional experience also includes consulting, accounting and assurance, fund administration, and investment banking. Paulo had financial reporting responsibility for more than 12 funds with a combined asset under management (AUM) above $5 billion, managed deal flow totaling over $90 million in capital raising efforts, and oversaw M&A transactions with more than $100 million in enterprise value.
He has an MBA from Eastern Illinois University and a bachelor's degree in accounting from Michigan State University. Paulo is a Certified Public Accountant (CPA), and he has Series 79 and 63 accreditations. Paulo is a member of the American Institute of Certified Public Accountants (AICPA), and the Michigan Association of CPAs.
In his free time, Paulo enjoys creating educational content (Udemy Courses), cooking, and playing soccer.