Fundraising

The first close is the first date on which a fund's general partner accepts subscriptions and admits investors, so that the fund legally begins operating with binding capital commitments.

The final close is the last date on which a fund admits new investors or accepts increased commitments, after which total commitments are fixed and later entrants can join only by acquiring existing interests.

A hard cap is the maximum aggregate commitments a fund may accept, fixed in its limited partnership agreement or offering terms, which the general partner cannot exceed without the consent the agreement requires.

A placement agent is a firm hired and paid by a fund manager to raise capital from investors: preparing marketing materials, identifying and introducing suitable limited partners and running the fundraising process, typically for a fee linked to capital raised.

A private placement memorandum (PPM) is the disclosure document an issuer, such as a private fund, gives prospective investors in an unregistered securities offering, describing the investment's strategy, terms, risks, conflicts, fees and legal, tax and regulatory matters.

A subscription agreement is an investor's contractual offer to commit a stated amount to a private fund or other private offering, with eligibility, tax and legal representations and agreement to be bound by the governing documents once accepted.

A limited partnership agreement (LPA) is the governing contract of a private fund organised as a limited partnership, setting out its purpose, term, capital commitments, economics, governance and the rights and obligations of the general partner and the limited partners.

A side letter is a separate agreement between a fund or its general partner and one LP that adds to or varies the limited partnership agreement's terms for that investor, for example on fees, reporting, regulatory accommodations or co-investment rights.

A due diligence questionnaire (DDQ) is a set of written questions, answered by an investment manager and backed by documents, on its firm, strategy, team, track record, fund terms, operations, compliance and ESG, used to assess and compare managers.

Regulation D (Reg D) is the set of Securities and Exchange Commission (SEC) rules, 17 CFR 230.500–230.508, that lets issuers, including private funds, sell securities without registering the offering under the Securities Act, chiefly through Rule 506(b), 506(c) or 504.

Rule 506(b) and Rule 506(c) are the two Regulation D exemptions for unlimited-size US private offerings: 506(b) prohibits general solicitation but allows up to 35 sophisticated non-accredited purchasers; 506(c) permits general solicitation if every purchaser is a verified accredited investor.

Form D is the notice an issuer files with the Securities and Exchange Commission (SEC) within 15 calendar days after the first sale in an offering under Rule 504 or Rule 506 of Regulation D or Securities Act section 4(a)(5).

An accredited investor is a person or entity in a category listed in Securities and Exchange Commission (SEC) Rule 501(a) of Regulation D; individuals qualify chiefly through net worth above $1 million, excluding the primary residence, or income above $200,000.

A qualified purchaser (QP) is an investor meeting a test in Investment Company Act section 2(a)(51), chiefly owning at least $5 million (individuals, family companies) or $25 million (most others) in investments; 3(c)(7) funds are limited to QPs.

The Institutional Limited Partners Association (ILPA) Reporting Template is the association's standard format for a private equity fund's quarterly report of fees, expenses, offsets and carried interest to its limited partners, set within a partner capital account roll-forward.