Why Use an SPV for Private Equity

2 min read

May 10, 2022 10:36:00 AM | Assure

Many investors—whether partners at a large organization responsible for financial management, or young financially savvy leaders in the startup world—are seeing the benefits of special purpose vehicles, also known simply as SPVs. There are many reasons for this popularity due to the advantages that SPVs provide. For instance, one major SPV advantage is flexibility, which is not always a factor of investment vehicles.

If you are in charge of finances or investment outlook for a business, or are a partner involved in these decisions (regardless of the size of the business) then it is worth looking into special purpose vehicles for future goals. And “goals” is the operative word here.

Just like the business you work for, or make decisions on behalf of, is unique in not only its offerings, but also in its strategy, SPVs can be unique in this way too. They can be tailored to meet your approach and align with your strategy, so you don’t have to shift gears and align with some new set of investment rules. And if that goal is to grow private equity, for example, there are many reasons that a special purpose vehicle might be the approach for you. If nothing else, it is worth considering some of the SPV private equity advantages below.

Advantages of an SPV

A special purpose vehicle allows investors to pool capital into a single structured vehicle. What’s more is that an SPV makes this process simple and straightforward. Sure, there are other SPV advantages that can be more specific, such as risk protection or isolating single projects from a larger business in the form of a smaller legal entity, but on a basic level, the biggest draw to a special purpose vehicle is the ease by which investors can invest in private assets.

Another major SPV advantage is the flexibility it provides. Flexibility in terms of how the SPV is going to be structured, to how many investors are going to participate, to how the entity is going to be maintained, among other factors. This flexibility is attractive to investors, and when the goal is private equity, flexibility and command over the investment vehicle is crucial.

Business people working and laughing, looking at computer screen

There are also SPV platforms, which make managing the life cycle of the vehicle simple and efficient. Assure’s glassdoor software platform, for example, allows the investors to save time and money, as well as manage the entire structure and operation from a single hub. This means keeping investors and participants on the same page, as well as simplifying and streamlining when need be.

Additionally, as a private legal entity, there are SPV tax benefits as well. Again, just like the special purpose vehicle can be structured differently and for various purposes, tax benefits can fluctuate. But when setting up an SPV with an SPV service organization, such as Assure, these SPV tax benefits will be applied wherever possible, since the experts know what to look for and how to structure your SPV in a way that makes the most sense for you, your goals, and your finances.

Begin Your SPV

If you are looking to build private equity, and have an investment group ready to organize and achieve your goals, a special purpose vehicle is an avenue worth learning more about and pursuing. Implementing a strategy for SPV private equity is a recipe for success for you and your investors and partners.

But remember that you don’t have to do all the legwork on your own. At Assure, we help you with SPV formation and ongoing SPV management, enabling you to focus on relationships and closing deals, and getting the most out of your special purpose vehicle. We know how to get the most out of SPV tax benefits, and to make sure you are on track to hit your benchmarks.

Reach out to learn more about Assure and the advantages of SPVs today, and click here to get started on beginning your own SPV.