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Private Equity Funds - Coggle Diagram

- - - - from Limited Partners (LPs)
        
        Limited Partnership Agreement (LPA)
        
        Defines the terms of the relationship between the GPs and the LPs
        
        Pensions and insurance companies
        
        Endowments
        
        High-net-worth individuals
      - Because of the high-risk investors in PE are typically restricted
        
        Accredited Investors
        
        Financially sophisticated, income >$200,000 per year
  - - - Used to pay the fund's operating expenses that are associated with funding new investments
    - - Profit-sharing agreement that serves to align GP and LP interests
      - 80/20 structure
- - - - To put the lion's share of the LPs' funds to work
    - - GPs look to exit their investments by
        
        Selling to a corporate buyer or another PE firm
        
        IPO