Private Equity Firm Business Plan Template
Written by Dave Lavinsky
Over the past 20+ years, we have helped over 10,000 entrepreneurs and business owners create business plans to start and grow their private equity firm.
In this article, we will first give you some background information with regards to the importance of business planning. We will then go through a private equity firm business plan template step-by-step so you can create your plan today.
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What Is a Private Equity Firm Business Plan?
A business plan provides a snapshot of your private equity firm as it stands today, and lays out your growth plan for the next five years. It explains your business goals and your strategies for reaching them. It also includes market research to support your plans.
Why You Need a Private Equity Firm Business Plan
If you’re looking to start a private equity firm business or grow your existing private equity firm company, you need a business plan. A solid business plan will help guide your business strategy, your investment strategy and your decision-making. It will also help you raise funding, if needed, and plan out the growth of your private equity firm business to improve your chances of success. Your private equity firm business plan is a living document that should be updated annually as your company grows and changes.
Sources of Funding for Private Equity Firm Businesses
With regards to funding, the main sources of funding for a private equity firm are personal savings, credit cards, bank loans, and angel investors. When it comes to bank loans, banks will want to review your business plan and gain confidence that you will be able to repay your loan and interest. To acquire this confidence, the loan officer will not only want to ensure that your financials are reasonable, but they will also want to see a professional plan. Such a plan will give them the confidence that you can successfully and professionally operate a business. Personal savings and bank loans are the most common funding paths for private equity firm companies.
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How to write a business plan for a private equity firm business.
If you want to start a private equity firm
or expand your current one, you need a business plan. A strong private equity firm business plan should include the following 10 sections:
Executive Summary
Your executive summary provides an introduction to your business plan, but it is normally the last section you write because it provides a summary of each key section of your plan.
The goal of your executive summary is to quickly engage the reader. Explain to them the kind of private equity firm business you are running and the status. For example, are you a startup, or do you have a private equity firm business that you would like to grow?
Next, provide an overview of each of the subsequent sections of your plan.
- Give a brief overview of the private equity firm industry.
- Discuss the type of private equity firm you are operating.
- Detail your direct competitors. Give an overview of your target customers.
- Provide a snapshot of your marketing strategy. Identify the key members of your team.
- Offer an overview of your financial plan.
Company Overview
In your company overview, you will detail the type of private equity firm you are operating.
For example, you might specialize in one of the following types of private equity firm businesses:
- Venture Capital Firms : this type of firm focuses on investing in early-stage companies with high growth potential.
- Buyout/Leveraged Buyout (LBO) Firms: this type of firm focuses on investing in mature companies with stable cash flows.
- Growth Capital Firms: this type of firm focuses on established companies that are looking ot expand or restructure.
- Distressed Investments Firms: this type of firm focuses on investing in companies facing financial difficulties.
- Mezzanine Financing Firms: this type of firm focuses on providing subordinated debt to companies.
In addition to explaining the type of private equity firm you will operate, the company overview needs to provide background on the business.
Include answers to questions such as:
- When and why did you start the business?
- What milestones have you achieved to date? Milestones could include the number of investments you’ve made, the number of investments you have successfully exited, reaching X number of portfolio brands, etc.
- Your legal business Are you incorporated as an S-Corp? An LLC? A sole proprietorship? Explain your legal structure here.
Industry Analysis
In your industry or market analysis, you need to provide an overview of the private equity firm industry.
While this may seem unnecessary, it serves multiple purposes.
First, researching the private equity firm industry educates you. It helps you understand the market in which you are operating.
Secondly, market research can improve your marketing strategy, particularly if your analysis identifies market trends.
The third reason is to prove to readers that you are an expert in your industry. By conducting the research and presenting it in your plan, you achieve just that.
The following questions should be answered in the industry analysis section of your private equity firm business plan:
- How big is the private equity firm industry (in dollars)?
- Is the market declining or increasing?
- Who are the key competitors in the market?
- Who are the key suppliers in the market?
- What trends are affecting the industry?
- What is the industry’s growth forecast over the next 5 – 10 years?
- What is the relevant market size? That is, how big is the potential target market for your private equity firm business? You can extrapolate such a figure by assessing the size of the market in the entire country and then applying that figure to your local population.
Customer Analysis
The customer analysis section of your private equity firm business plan must detail the customers you serve and/or expect to serve.
The following are examples of customer segments: Institutional Investors, High Net Worth Individuals (HNWIs), and Retail Investors.
As you can imagine, the customer segment(s) you choose will have a great impact on the type of private equity firm business you operate. Clearly, HNWIs would respond to different marketing promotions than Pension Funds (Institutional Investors), for example.
Try to break out your target customers in terms of their demographic and psychographic profiles. Consider the specific demographics of target customers, including a discussion of the ages, occupations, locations and income levels of the potential customers you seek to serve.
Psychographic profiles explain the wants and needs of your target customers. The more you can recognize and define these needs, the better you will do in attracting and retaining your customers.
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Competitive Analysis
Your competitive analysis should identify the indirect and direct competitors your business faces and then focus on the latter.
Direct competitors are other private equity firm businesses.
Indirect competitors are other options that customers have to purchase from that aren’t directly competing with your product or service. This includes less risky investment options like bonds or mutual funds. You need to mention such competition, as well.
For each direct competitor, provide an overview of their business and document their strengths and weaknesses. Unless you once worked at your competitors’ businesses, it will be impossible to know everything about them. But you should be able to find out key things about them such as:
- What types of customers do they serve?
- What type of private equity firm are they?
- What is their pricing (premium, low, etc.)?
- What are they good at?
- What are their weaknesses?
With regards to the last two questions, think about your answers from the customers’ perspective. And don’t be afraid to ask your competitors’ customers what they like most and least about them.
The final part of your competitive analysis section is to document your areas of competitive advantage. For example:
- Will you provide a variety of investment vehicle options?
- Will you offer products or services that your competition doesn’t?
- Will you provide better customer service?
- Will you offer better pricing?
Think about ways you will outperform your competition and document them in this section of your plan.
Marketing Plan
Traditionally, a marketing plan includes the four P’s: Product, Price, Place, and Promotion. For a private equity firm business plan, your marketing strategy should include the following:
Product : In the product section, you should reiterate the type of private equity firm company that you documented in your company overview. Then, detail the specific products or services you will be offering. For example, will you provide opportunities to invest in private companies, venture capital, or real estate?
Price : Document the prices you will offer and how they compare to your competitors. Essentially, in the product and price sub-sections of your plan, you are presenting the products and/or services you offer and their prices.
Place : Place refers to the site of your private equity firm. Document where your company is situated and mention how the site will impact your success. For example, is your private equity firm located in the financial district, a business district, a standalone office, or purely online? Discuss how your site might be the ideal location for your customers.
Promotions : The final part of your private equity firm marketing plan is where you will document how you will drive potential customers to your location(s). The following are some promotional methods you might consider:
- Host webinars and industry-specific events
- Advertise in trade publications and journals
- Engage in email marketing
- Advertise on social media platforms
- Improve the SEO (search engine optimization) on your website for targeted keywords
Operations Plan
While the earlier sections of your business plan explained your goals, your operations plan describes how you will meet them. Your operations plan should have two distinct sections as follows:
Everyday short-term processes include all of the tasks involved in running your private equity firm, including making and answering calls, sourcing deals, research and due diligence, etc.
Long-term goals are the milestones you hope to achieve. These could include the dates when you expect to close your Xth deal, or when you hope to reach $X in revenue. It could also be when you expect to expand your private equity firm to a new market.
Management Team
To demonstrate your private equity firm business’ potential to succeed, a strong management team is essential. Highlight your key players’ backgrounds, emphasizing those skills and experiences that prove their ability to grow a company.
Ideally, you and/or your team members have direct experience in managing private equity firm businesses. If so, highlight this experience and expertise. Also highlight any experience that you think will help your business succeed.
If your team is lacking, consider assembling an advisory board. An advisory board would include 2 to 8 individuals who act as mentors to your business. They help answer questions and provide strategic guidance. If needed, look for advisory board members with experience in managing a private equity firm or successfully running a profitable business.
Financial Plan
Your financial plan should include your 5-year financial statement broken out both monthly or quarterly for the first year and then annually. Your financial statements include your income statement, balance sheet, and cash flow statements.
Income Statement
An income statement is more commonly called a Profit and Loss statement or P&L. It shows your revenue and then subtracts your costs to show whether you turned a profit or not.
In developing your income statement, you need to devise assumptions. For example, will you close 5 deals per week, and/or manage an extensive portfolio? And, will sales grow by 2% or 10% per year? As you can imagine, your choice of assumptions will greatly impact the financial forecasts for your business. As much as possible, conduct research to try to ground your assumptions in reality.
Balance Sheets
Balance sheets show your assets and liabilities. While balance sheets can include much information, try to simplify them to the key items you need to know about. For instance, if you spend $50,000 on building out your private equity firm, this will not give you immediate profits. Rather, it is an asset that will hopefully help you generate profits for years to come. Likewise, if a lender writes you a check for $50,000, you don’t need to pay it back immediately; that is a liability you will pay back over time.
Cash Flow Statement
Your cash flow statement will help determine how much money you need to start or grow your business, and ensure you never run out of money. What most entrepreneurs and business owners don’t realize is that you can turn a profit, but run out of money and go bankrupt.
When creating your Income Statement and Balance Sheets, be sure to include several of the key costs needed in starting or growing a private equity firm business:
- Cost of equipment and office supplies
- Payroll or salaries paid to staff
- Business insurance
- Other start-up expenses (if you’re a new business) like legal expenses, permits, computer software, and equipment
Attach your full financial projections in the appendix of your plan along with any supporting documents that make your plan more compelling. For example, you might include your office location lease or a breakdown of database subscriptions.
Putting together a business plan for your private equity firm will improve your company’s chances of success. The process of developing your plan will help you better understand the private equity firm market, your competition, and your customers. You will also gain a marketing plan to better attract and serve customers, an operations plan to focus your efforts, and financial projections that give you goals to strive for and keep your company focused.
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Other Helpful Business Plan Articles & Templates
Private Equity Firm Business Plan
Written by Dave Lavinsky
You’ve come to the right place to create your Private Equity Firm business plan.
We have helped over 1,000 entrepreneurs and business owners create business plans and many have used them to start or grow their Private Equity Firm businesses.
Below is a template to help you create each section of your Private Equity Firm business plan.
Executive Summary
Business overview.
Phillips Capital is a startup Private Equity Firm located in Boston, Massachusetts. The company was founded by Robert Phillips, a veteran of the investment banking industry. For over fifteen years, Robert served as an investment partner at a prestigious investment firm, navigating complex financial landscapes with agility and expertise. Robert believes his experience in the banking sector, combined with his reputation of personalized service, will provide everything needed for long-term growth and profitability.
Phillips Capital is an investment manager, providing financial backing and making investments in private companies. Phillips Capital aims to back companies with funds raised from both institutions and individuals.
Product Offering
The following are the services that Phillips Capital will provide:
- Raising funds for investing
- Investing in growing companies
- Oversight and strategic direction for companies it has invested in (aka “portfolio companies”)
- Generating returns for investors
Customer Focus
Phillips Capital’s services are tailored to high-net-worth individuals and families and institutions, as well as small to mid-sized companies who need funding. We strive to understand the unique financial goals of each client, providing them with funding or investment strategies that address their specific needs and aspirations.
Management Team
The team at Phillips Capital is led by Robert Phillips and includes seasoned professionals from diverse backgrounds. Each member brings a wealth of experience and a track record of success that will be critical in driving the firm towards achieving its business objectives.
Robert graduated from Boston College with an MBA concentrating in finance. He has been working at a local investment banking firm for the past fifteen years, and has successfully recruited team members for the new company.
Robert has recruited Travis Lange, a former colleague, to join the new company. In this role, Travis will oversee all business development activities at Phillips Capital.
Robert has also recruited Ashley Goodwin, who worked as the administrative assistant at Robert’s former employer, to be the Administrative Manager, assisting with back office operations.
Success Factors
Phillips Capital will be well-positioned to achieve success by offering the following competitive advantages:
- Friendly, knowledgeable, and highly-qualified team
- Personalized advice enhanced by state-of-the-art investment management technology
- Phillips Capital offers competitive pricing, which is on par with local competition
- Robert Phillips has a track record of choosing investments that realize high returns
Financial Highlights
Phillips Capital is seeking $475,000 in debt financing to launch. The funding will be dedicated toward securing the office space and purchasing office equipment and supplies. Funding will also be dedicated toward three months of overhead costs to include payroll of the staff, rent, and marketing costs. The breakout of the funding is below:
- Office space build-out: $100,000
- Office equipment, supplies, and materials: $100,000
- Three months of overhead expenses (payroll, rent, utilities): $150,000
- Marketing costs: $75,000
- Working capital: $50,000
Company Overview
Who is phillips capital company.
Phillips Capital is a startup Private Equity Firm located in Boston, Massachusetts. The company specializes in middle-market investments across a variety of industries. Founder Robert Phillips has built a reputation for his commitment to driving value creation in his portfolio companies.
Phillips Capital will focus on investing in companies with strong growth potential and stable cash flows. It will target both startups and established businesses with revenues ranging from $20 million to $200 million. Further, the firm plans to take a hands-on approach, working closely with management teams to unlock value and achieve sustainable growth.
Robert Phillips will lead a team of professionals who are highly qualified and experienced in investment management. The firm capitalizes on Robert’s extensive experience and network in private banking to offer a new standard in Private Equity.
Phillips Capital Company History
Phillips Capital is owned and operated by Robert Phillips. For over fifteen years, Robert has served as a partner at a prestigious investment firm. He has witnessed startups enjoy mercurial growth and fostered others through major business hurdles. He also navigates complex financial landscapes with agility and expertise.
Throughout his career, Robert has enjoyed the challenges and rewards of private banking. He built relationships across the industry, always making connections that might be beneficial for a future investment. Over time, Robert grew increasingly confident that his approach to investment banking warranted a fresh start, free from the bureaucracy of a large firm.
The turning point came during a meeting with a promising tech startup. The startup had developed an innovative solution in the health tech space, and Robert saw immense potential. Yet, his firm’s partners were reluctant to invest, citing the perceived risks involved. Robert left the meeting realizing that his vision of backing transformative ventures was not aligned with his firm’s risk-averse culture.
It was during a conversation with his mentor, David, that Robert’s decision crystallized. David, a retired private equity titan, had always encouraged Robert to trust his instincts. “You’ve got the eye, Robert,” David said. “Don’t let others’ fears stifle your potential. Sometimes, you have to take the leap to make a real impact.”
Inspired by these words, Robert began to lay the groundwork for his own private equity firm. He envisioned a firm that would not only seek high returns but also support visionary entrepreneurs and disruptive technologies. He wanted to create an environment where innovation was celebrated and calculated risks were part of the strategy.
Robert’s reputation, his deep understanding of client needs, and his instinctive approach provided the perfect foundation for his venture. With these elements, he formed Phillips Capital, a firm that stood at the intersection of tradition and innovation, embodying the best of both worlds.
Since incorporation, Phillips Capital has achieved the following milestones:
- Registered Phillips Capital, LLC to transact business in the state of Massachusetts.
- Has a contract in place for a 5,000 square foot office at one of the downtown buildings
- Reached out to numerous contacts to introduce Phillips Capital as a potential investment partner.
- Began recruiting key staff to help start up Phillips Capital
Phillips Capital Company Services
The following will be the services Phillips Capital will provide:
Industry Analysis
The wealth management industry is characterized by its dynamic growth, driven by increased interest rates and high inflation. The industry is also increasingly incorporating ESG factors in investment strategy, which has effected a shift toward sustainability.
The Private Equity industry is expected to grow over the next five years to over $383 billion.
The growth will be driven by volatile interest rates, environmental and societal concerns, and the increasing use of technology and data analytics.
Private equity firms have lower operational costs when compared to other businesses. There is a trend toward using performance-based fees, which means PE firms are making less money up front and taking on riskier investments. However, as their revenues grow, this approach helps cover wage costs, and profit-sharing plans are making sure that employees and investors are on the same page.
Customer Analysis
Demographic profile of target market.
Phillips Capital’s target market primarily consists of mid-market companies who are looking for funding.
Customer Segmentation
Phillips Capital will primarily target the following customer profiles:
- High-Net-Worth Individuals: These clients look for investment strategies to manage substantial assets, minimize risks, and ensure long-term financial security.
- Institutions: Our firm serves institutional investors (e.g. insurance companies, banks, endowments, etc.) to support their investment and growth objectives.
- Mid-market companies: Our firm will target companies who have revenue between $20 and $200 million, and a promising growth trajectory.
Competitive Analysis
Direct and indirect competitors.
Phillips Capital will face competition from other companies with similar business profiles. A description of each competitor company is below.
Formation Capital
Formation Capital is a Chicago-based, lower middle market private equity firm that invests in technology-driven companies across SaaS, technology-enabled services, and data intelligence products and services. With their partnerships, Formation is able to support growth and efficiency within businesses through execution of the strategic value creation levers identified for each company within the portfolio. The criteria for acquisition include companies that are software or tech-enabled, a revenue of $3M – $30M, strong customer retention, opportunity for acceleration, and a defined path of r 20%+ profit margins.
Round Rock Partners
Round Rock Partners is a Boston-based private investment firm that focuses on buy and build strategy in growth oriented middle market companies mostly in the fragmented industries such as software, tech-enabled services, and industrials sectors. Executives at portfolio companies of Round Rock participate in acquisitions, advices companies as board members, operates businesses on a day to day basis, and help shape business strategy. The criteria for the target companies Round Rock invests in include revenue between $10M – $150M, EBITDA between $3M – $15M, companies located in the US and Canada, and companies that are willing to have the transaction type be control ownership and buyouts. Current projects are in the tech services, health care services, industrial, and security solutions industries.
Barnes Venture Partners
Established in 1911, Barnes Venture Partners is a privately held venture capital business focused on consumer, enterprise, and healthcare startups based out of San Francisco, CA. Barnes Venture Partners has more than $1B in assets under management. Barnes Venture Partners primarily offer seed and Series A investments. BVP funded the early stages of half a dozen unicorns and helped build 120 IPOs in the last 50 years. Barnes Venture Partners has 16 investing partners operating from offices in Silicon Valley, San Francisco, New York City, Boston, Israel, and India. Barnes Venture Partners has invested into 1,407 companies (with 551 Exits) with a current Portfolio of 262.
Competitive Advantage
Phillips Capital uniquely positions itself in the market by blending expert investment advice with innovative technological solutions. This hybrid approach allows us to offer a level of customization and efficiency that our competitors cannot match, thereby ensuring superior client satisfaction and loyalty.
Marketing Plan
Brand & value proposition.
Phillips Capital will offer a unique value proposition to its clientele:
- Personalized approach enhanced by state-of-the-art investment management technology
- Phillips Capital offers competitive pricing, which is on par with local competition.
Promotions Strategy
The promotions strategy for Phillips Capital is as follows:
Word of Mouth/Referrals Robert has built up an extensive list of customers and contacts over the years by providing exceptional service and expertise to his former clients. The contacts and clients will follow Robert to the new company and help spread the word of Phillips Capital.
Professional Associations and Networking Local, regional and national associations will be joined by each of the management team members. Collaborations and partnerships with compatible companies will be pursued as the company looks at long-term growth and sustainability.
Print Advertising Two weeks prior to the launch date, a regional flier will be distributed to all businesses in the target audience area.
Website/SEO Marketing Phillips Capital will fully utilize their website. The website will be well organized, informative, and list all the products and services that Phillips Capital provides. The website will engage in SEO marketing tactics so that anytime someone performs an online search for “private equity company” or “PE firm near me,” Phillips Capital will be listed at the top of the search results.
The pricing of Phillips Capital will be moderate and on par with competitors, so customers feel they receive excellent value when purchasing their services.
Operations Plan
Our operations are centered around key functions such as client onboarding, ongoing portfolio management, regular financial reviews, and compliance with financial regulations. Operation Functions:
- Robert Phillips is the owner and President of the company. He will oversee all staff and manage client relations. He has spent the past year recruiting the following staff:
- Travis Lange, a former colleague, will oversee all business development activities.
- Ashley Goodwin, who worked as the administrative assistant at Robert’s former employer, to be the Administrative Manager, assisting with back office operations
Milestones:
Phillips Capital will have the following milestones completed in the next six months.
- 5/1/202X – Finalize contract to lease office space
- 5/15/202X – Finalize personnel and staff employment contracts for the Phillips Capital
- 6/1/202X – Finalize contacting potential clients for Phillips Capital
- 6/15/202X – Begin networking at industry events
- 6/22/202X – Begin moving into Phillips Capital office
- 7/1/202X – Phillips Capital opens its doors for business
Robert graduated from Boston College with an MBA concentrating in finance. He has been working at a prestigious private equity firm for the past fifteen years, and has successfully recruited team members for the new company.
Financial Plan
Key revenue & costs.
The revenue model is based on performance based fees, which are calculated as a percentage of funds raised, and returns on investment. Major costs include salaries for the team, investment in technology infrastructure, and marketing expenses.
Funding Requirements and Use of Funds
Key assumptions.
The following outlines the key assumptions required in order to achieve the revenue and cost numbers in the financials and in order to pay off the startup business loan.
- Number of clients: 150
- Average revenue per Month: $200,000
- Office Lease per Year: $180,000
Financial Projections
Income statement, balance sheet, cash flow statement, private equity firm business plan faqs, what is a private equity firm business plan.
A private equity firm business plan is a plan to start and/or grow your private equity firm business. Among other things, it outlines your business concept, identifies your target customers, presents your marketing plan and details your financial projections.
You can easily complete your Private Equity Firm business plan using our Private Equity Firm Business Plan Template here .
What are the Main Types of Private Equity Firm Businesses?
There are a number of different kinds of private equity firm businesses, some examples include: Venture Capital Firms, Buyout/Leveraged Buyout (LBO) Firms, Growth Capital Firms, Distressed Investments Firms, and Mezzanine Financing Firms.
What are the Steps To Start a Private Equity Firm Business?
Starting a private equity firm business can be an exciting endeavor. Having a clear roadmap of the steps to start a business will help you stay focused on your goals and get started faster. 1. Develop A Private Equity Firm Business Plan - The first step in starting a business is to create a detailed private equity firm business plan that outlines all aspects of the venture. This should include potential market size and target customers, the services or products you will offer, pricing strategies and a detailed financial forecast. 2. Choose Your Legal Structure - It's important to select an appropriate legal entity for your private equity firm business. This could be a limited liability company (LLC), corporation, partnership, or sole proprietorship. Each type has its own benefits and drawbacks, so it’s important to do research and choose wisely so that your private equity firm business is in compliance with local laws. 3. Register Your Private Equity Firm Business - Once you have chosen a legal structure, the next step is to register your private equity firm business with the government or state where you’re operating from. This includes obtaining licenses and permits as required by federal, state, and local laws. 4. Identify Financing Options - It’s likely that you’ll need some capital to start your private equity firm business, so take some time to identify what financing options are available such as bank loans, investor funding, grants, or crowdfunding platforms. 5. Choose a Location - Whether you plan on operating out of a physical location or not, you should always have an idea of where you’ll be based should it become necessary in the future as well as what kind of space would be suitable for your operations. 6. Hire Employees - There are several ways to find qualified employees including job boards like LinkedIn or Indeed as well as hiring agencies if needed – depending on what type of employees you need it might also be more effective to reach out directly through networking events. 7. Acquire Necessary Private Equity Firm Equipment & Supplies - In order to start your private equity firm business, you'll need to purchase all of the necessary equipment and supplies to run a successful operation. 8. Market & Promote Your Business - Once you have all the necessary pieces in place, it’s time to start promoting and marketing your private equity firm business. This includes creating a website, utilizing social media platforms like Facebook or Twitter, and having an effective Search Engine Optimization (SEO) strategy. You should also consider traditional marketing techniques such as radio or print advertising.
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