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(2)
development. To structure private equity investment, private equity

firm (often called a çprivate equity sponsoré) typically forms private
equity funds, most commonly in the form of limited partnership, in the
(3)
jurisdiction where most favorable tax benefits are available. Capitals

will then be raised from institutional and high-net-worth investors,
who are usually the limited partners of the funds and whose liabilities

are as such limited only to the amount of their capital contribution.

On the other hand, private equity firm will act as a general partner,

who will also invest a small percentage (1% to 3%) of the fundsû total
(4)
capital.

(2)
See KAY MÜLLER, INVESTING IN PRIVATE EQUITY PARTNERSHIPS: THE ROLE OF MONITORING AND REPORTING
11 (2008) (providing that ç[p]rivate equity investments comprise all equity investments in

non-public, closely held companies that face a transformation situation in their corporate
development); JENS ENGELHARDT & PASCAL GANTENBEIN, VENTURE CAPITAL IN SWITZERLAND: AN
EMPIRICAL ANALYSIS OF THE MARKET FOR EARLY-STAGE INVESTMENTS AND THEIR ECONOMIC CONTRIBUTION
9 (2010) (explaining that ç[t]he term private equity has no consistent applied definition in
the literature; increasingly, the term is applied to any investment not occurring in a
recognized public financial market.é); H. Kent Baker, Greg Filbeck & Halil Kiymaz, Private
Equity: An Overview, in PRIVATE EQUITY: OPPORTUNITIES AND RISKS 3, 3-15 (H. Kent Baker, Greg

Filbeck and Halil Kiymaz eds., 2015) (explaining that ç[p]rivate equity is an asset class
consisting of equity securities and debt in companies not quoted on a public exchange.é).
But see CYRIL DEMARIA, INTRODUCTION TO PRIVATE EQUITY: VENTURE GROWTH, LBO & TURN-AROUND
CAPITAL (2d ed. 2013) (stating that ç...the expression ùprivate equityû covers only part of its
field of action. The ùprivateû or unlisted element is no longer decisive; nor is that of
ùequityû.é).
(3)
See Joseph A. McCahery & Erik P. M. Vermeulen, Private Equity Regulation: A Comparative
Analysis, 16 J. MANAG. GOV. 210, 197-233 (2012).
(4)
See id.; The Financial Poise Editors, 90 Second Lesson - Private Equity Sponsor v. Private
Equity Fund, https://www.financialpoise.com/private-equity-fund-v-pe-sponsor/ (last visited
Dec. 5, 2019).

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