The Business of Value Investing.pdf

Starting an Investment Partnership 245

few hundred thousand dollars, be aware that you may be required

to spend a little time doing administrative work in addition to ana-

lyzing securities. With a smaller fund (under $ 1 million), it may be

best to look to regional service providers to handle basic account-

ing and administrative efforts.

Setting up a full - blown straightforward private investment partner-

ship can demand substantial up - front costs. These costs will include:

• Legal fees to prepare the required documents can cost any-
  where from $ 15,000 to $ 25,000.


• Engagement of a fund administrator to set up the accounting
  of the fund: $ 1,500 to $ 3,000.


• Factor in another $ 1,000 or so for miscellaneous expenses,
  such as mailings, printings, and so on.

Service Providers

For a fully functioning investment partnership, you ’ ll need fi ve serv-

ice providers:

1. Attorney


2. Fund administrator


3. Fund custodian (broker)


4. Accountant


5. Auditor

Attorney

You will need an attorney to draft your legal documents, commonly

referred to as the private placement memorandum. These are the

documents that inform potential investors of the goals, objectives,

and risks of the fund. The complexity of the investment strategy will

determine the ultimate costs associated with preparing the docu-

ments. Bigger, more established law fi rms may charge more, but it

can be more effi cient in the long run to use a fi rm that is familiar

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