It is very easy to comply. A longer hold for investment before they can monazite. Fees should be adjusted to increase current fees and reduce the carry.
Ask A Question
What are some challenges private equity groups can face when moving into OZ investments?
How did the second round of regulations change the situation for PEs in OZs?
Answers
Other than carried interest not being eligible for OZ tax benefits, the challenges are mostly related to securities law and negative publicity. You'll need to protect yourself with a well-drafted PPM and consider what kind of backlash you might get from the local populace or the general public when making these investments.
I feel PE groups struggle to understand the added complexity of OZ compliance and can help themselves by having a good accounting team and a lawyer familiar with OZ structuring and reporting.
The latest round of regulations did clarify concerns that private equity had regarding opportunity zone investments, clearing the way for private equity to invest in operating businesses in opportunity zones. There are safe harbor tests that allow flexibility to businesses to comply with the active trade or business requirement in an Opportunity Zone.
DISCLAIMER:the information found on this website is intended to be general information; it is not legal or financial advice. Specific legal or financial advice can only be given by a licensed professional with full knowledge of all the facts and circumstances of your particular situation. You should seek consultation with legal and financial experts prior to participating in any aspect relating to Opportunity Zones. Posting a question on this website does not create an attorney-client relationship. All questions you post will be available to the public; do not include confidential information in your question.