Regulatory Issues

by a searcher from Middlebury College

4 years ago

Depending on how large the acquisition is, and how much equity funding is required based on cap structure, are there any regulatory issues to be aware of above a certain dollar threshold if you’re technically ‘managing’ investor capital? For example, a requirement to be a registered investment advisor? If so, what are the costs associated with compliance?

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searcher from University of Pennsylvania - The Wharton School

Not legal advice... but my understanding is that SEC registration for an entity as a RIA is mandatory at 100MM AUM but optional if you are sub 100MM AUM. If investors are purchasing LLC interests it is an offering of securities, as such you need to keep it exempt from registration (simple in practice... don’t cold call random old ladies asking them to invest and you will be fine.). More seriously, any corporate/securities attorney can keep you on the right side of state&federal securities laws. Disclaimers are important though for pro formas or if you are presenting your track record. Happy to discuss further.

4 years ago | like reply | 2 likes

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