Can anyone help me answer these questions. I tried to answer the first question but I am not 100% sure as my textbook is very bland and I can't find hard solutions online. Thank you!

1) What are the major subcategories of private equity, and how do their investment approaches differ?

• Limited partnership
  • Liability for investment is limited to the amount they invested
  • If they invest in a private equity fund that then invests in a company developing a drug that turns out to have dangerous side effects, the limited partners cannot be sued for damages.
  • They might lose their entire investment in that company and possibly in that fund, but they are legally protected from losing their houses or other assets if the fund is found liable for negligence.
• General Partnership
  • have sole responsibility for sourcing and managing portfolio companies at the cost of unrestricted liability
  • To protect themselves from risk, and to handle other legal issues, most U.S. private equity firms create an LLC
  • LLC bears the liability for product malfunctions and other unfortunate situations. This corporation becomes the general partner, and the human investors act as the organizations directors

2) How might a GP be successful in raising a first-time fund without a track record?

3) Why would a corporation, like Intel, want to invest in private equity?

4) Which type of LP might be inclined to increase its private equity investment allocation going forward? Why?

5) What is the primary role of a fund-of-funds, and what type of investor is likely to invest in one?

6) Why have funds-of-funds received criticism?

7) In the LPA, how are the interests of the LP and GP aligned?

8) Why have larger private equity firms (in terms of assets under management) come under scrutiny regarding their management fee structure?

9) If a firm with a $5 billion fund charges a 2 percent management fee for eight years, and 20 percent carried interest on all profits, and earns a 3x return on its investments, what is the true multiple of investment and IRR for the LP? (Assume that investments are made equally at the beginning of the 1^st 5^th years, the holding period of each investment is 5 years, and there are no transaction fees.)

10) In question 9, what if the fund is structured so that instead of having to return drawndown capital, the manager needs to return only the capital that was actually invested in companies ( ex., not including management fees). How would the investment multiple and IRR change?