Accounting For Funds: Private Equity

Private Equity Fund Economics and Financial Reporting

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
Requirements
Basic to intermediate understanding of general accounting
Basic to intermediate understanding of U.S. GAAP
Basic understanding of finance
Basic understanding of capital markets
Description
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 fundHow private equity funds are set-up (stand alone fund, master-feeder, parallel, etc.)Legal entities and preferable jurisdictionsTeam 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 scheduleManagement and performance fees calculationNet asset value calculationAt 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.

Overview

Section 1: Course and Professor Introduction

Lecture 1 Introduction

Lecture 2 Additional Info

Lecture 3 Instructor Background

Lecture 4 Course Outline

Lecture 5 Quick Brush Up on Your Accounting

Section 2: Key Concepts

Lecture 6 Defining fund and fund characteristics

Lecture 7 Difference between VC, private equity, and hedge fund

Lecture 8 Private Equity vs. Hedge Fund

Lecture 9 Section Recap

Section 3: Fund Organization

Lecture 10 Section introduction

Lecture 11 Legal Structure, Jurisdiction, and Structure

Lecture 12 Fund Documents and Their Importance

Lecture 13 Fund Example and Fees

Lecture 14 Fund Participants

Lecture 15 Fund Participants: Investors - Accredited vs. Institutional

Lecture 16 Fund Participants: Regulators

Lecture 17 Section Recap

Section 4: Financial Statements

Lecture 18 Module introduction

Lecture 19 Clarifying Concepts

Lecture 20 Private Equity Financial Statements

Lecture 21 Capital Activities Entries (Part I)

Lecture 22 Capital Call

Lecture 23 Operating Expenses Entries

Lecture 24 Capital Call and Funding a Deal

Lecture 25 First Deal Income: Interest Income

Lecture 26 Management, Performance, and NAV

Lecture 27 Capital Call #03

Lecture 28 Financials Updates: Opex and Income Entries

Lecture 29 Deal #02: Yeto Institute

Lecture 30 Deal #2 Entries and Monthly Updates

Lecture 31 Deal #03 - 30% Investment Stake in EduTech Corp

Lecture 32 September NAV Update

Lecture 33 Exit of an Investment

Lecture 34 Capital Redemption: Return of Capital and PnL

Section 5: Course Conclusion and Final Considerations

Lecture 35 Course Summary and Final Considerations

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