Dr Ariel Sergio Davidoff examines how private label funds can support wealthy entrepreneurs. He also considers their long-term financial and business goals.
The original article appeared during a financial crisis. At that time, liquidity and asset prices had fallen. Some entrepreneurs had already accumulated significant cash reserves. Others could sell business shares to third parties. Consequently, these market conditions created attractive investment opportunities.
Why entrepreneurs consider private label funds
Successful entrepreneurs often pursue a clear vision despite significant obstacles. However, personal wealth can create new challenges outside the operating business. These challenges include investment management, governance and succession planning.
Many entrepreneurs also want continued access to their capital. Therefore, they need flexible structures for new ventures and investment opportunities.
Potential benefits and limitations
Private label funds can give entrepreneurs a structured way to manage selected assets. Moreover, these funds can improve consolidated reporting, governance and risk management. They can also support succession planning.
Furthermore, entrepreneurs can separate certain investments from daily business operations. Nevertheless, no fund structure removes investment, tax, legal or liquidity risks. Each entrepreneur must assess the structure against personal goals and circumstances.
Jurisdiction and regulation
Several financial centres offer suitable fund structures. However, each jurisdiction applies different rules. For example, these rules cover authorisation, investors, distribution, taxation, custody and reporting.
Therefore, entrepreneurs should seek independent legal, tax and investment advice. Specialists should review every structure before its launch.
Read the original article: The Tale of the Renaissance Entrepreneur
FINMA explains the requirements for Swiss collective investment schemes. Additionally, EUR-Lex presents the EU rules for alternative investment fund managers.
