REO Capital versus Third Party Markeeters Fees
REO Capital, has more services and a larger distribution network than Third Party Marketers!
by john denes Wednesday, November 21, 2012
Based in Detroit Michigan, REO Capital, LLC is a retained Private Equity Consulting & Capital Raising firm for Hedge funds and Private Equity Funds. REO Capital provides Capital Raises, to established and emerging, Hedge Funds and Private Equity Funds. REO Capital works with funds globally who have at least a one year track record. REO Capital carefully selects the projects we work on so that we can dedicate the proper time and resources necessary to complete the capital raising.
Third Party Marketers may take on 70 to 100 projects per year unable to allocate the needed resources to complete these projects. Third Party Marketing Firms typically charge 20% of the management fees and 20% of the performance fees received by the fund and an additional Success Fee of anywhere from 2% to 10% of the capital raise from the General Partners. Our cost analysis found that on an average Capital Raise of $100 Million the Fund will pay a total cost of approximately $5.9 Million in Fees for the Third Party Marketer versus REO Capital, LLC a Capital Introduction Retained Firm's total costs of about $2 Million. Third Party Marketers only work on the projects that pay the best. REO Capital is not a Private Placement Agent or a Third Party Marketer and we do not prioritize our projects like that.
First of all, when it comes to Capital Raising for any type of Fund there are certain risks that both parties have to share! There is Legal Risks involved, there is Expense Risks, and there is Lost Revenue Risks, both parties have to have "Skin in the Game" and share those risks equally. The way Fund Managers share that risk is to pay a Monthly Retainer for their Capital Raise and then they have a vested interest in the success of the Capital Raise! Our firm has designed a “Refund Contract” where the Fund Managers pays a Retainer on a monthly basis for the Capital Raise and REO Capital charges a 2% Success Fee and then at the completion of the capital raise REO Capital, Refunds the entire Retainer Fee of some $500,000 back to the Fund Manager. This shows us the Fund Manager is serious about a Capital Raise! Otherwise the Fund Manager & General Partners are getting the Capital Raise for FREE. The average Capital Raise of $100 Million takes about 24 months to complete. REO Capital will not cover all the risks & expenses alone during that 24 month period! REO Capital has our expenses of rent, automotive, employee salaries etc… just like every other firm!
However, keep in mind that my firm’s fees are about 70% less than a Third Party Marketing firm that charges a Success Fee and 40% less than other firms that charge a Retainer. There are no other Retained firms out there that will “Refund” all your Retainer Fees so that the Capital Raise is based on a Success Fee! Also our firm “re-invests” part of our Success Fee back into the funds we Raise Capital for so that REO Capital has a vested interest in the funds. Finally, we have a Non- Performance Clause in our Retainer Contract so there is no 24 month requirement on our Contract.
REO Capital, LLC is a boutique Capital Introduction firm we work for managers that have a niche in their chosen strategy, that have a good past performance and who we believe have an offering that will be attractive to our clients. REO Capital will often work with the General Partners and the fund to also offer fund progress updates and consultation services throughout the life of the investment. The role of REO Capital, LLC is to Raise Capital, provide research data and equity investments for the Capital Raise and serve as a bridge between Fund Managers and potential institutional investors.
REO Capital, LLC can offer competitive & comparative financial analysis data from Boston Analytics and competitive fee structures for Emerging Managers of Hedge Funds, & Private Equity Funds as well as General Partners & Fund Managers of more experienced Funds.
REO Capital is a unique Capital Introduction firm, REO Capital has an Innovative Refund Fee Structure, REO Capital will Co -Invest a portion of our Success Fees with the Funds we Raise Capital for, to prove we have a vested interest in the capital raise & REO Capital has no specific time frame for a Capital Raise with our Retainer Contract we use a Non -Performance Clause instead! The answer is simple; REO Capital is the Clear Choice for all your research & capital raising needs!
REO Capital, LLC
Detroit, MI USA
London, England UK
Prior to Starting REO Capital, John was the Chief Development Officer of a Leading Technology company where he ran the Private Equity Department for the firm. John was also with a Clean Tech Private Equity firm where he was the Director of Capital Development raising capital from Institutional Investors for their Biofuels funds. John also served as a VP of Institutions for a Global Macro Long Short Hedge Fund. John is also the Managing Partner of DeBere Partners US operations and jointly manages the company''s fundraising and investment business with a joint venture betweens firms. John has been personally involved in raising capital for various projects with institutional investors for the past 13 years. John was a Quantitative Portfolio Manager at Prudential Securities and was a frequent speaker at various colleges for the "Fundamental & Technical Analysis of Equities". John graduated from the Harvard of Aviation - Embry Riddle Aeronautical University in Daytona Beach, Florida with honors and recieved his Bachelors of Science in Aeronautical Studies. Later went on to recieve his MBA in Finance.
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