Aligning QOZB Investments with a Private Equity Strategy

Opportunity Zones Beyond Real Estate

While most Qualified Opportunity Funds (QOFs) target real estate, sophisticated investors are increasingly exploring Qualified Opportunity Zone Businesses (QOZBs) as a high-upside alternative. These operating businesses, located in Opportunity Zones, are eligible for the same tax benefits as real estate — including the full exclusion of capital gains after a 10-year hold — but offer growth characteristics more aligned with private equity.

QOZBs can operate in sectors like manufacturing, logistics, renewable energy, technology, or healthcare — providing access to cash flow, asset appreciation, and long-term enterprise value creation within a fully compliant tax-advantaged wrapper.

Structuring QOZBs Like Private Equity

To succeed, QOZB investments must be carefully structured to meet both IRS requirements and investor expectations for oversight, governance, and performance.

Working Capital Safe Harbor‍

QOZBs must comply with active business tests and maintain proper use of working capital. A 31-month safe harbor can be used to deploy capital intelligently over time, especially in early-stage or growth-phase businesses.

Fund Governance & Reporting‍

Private equity-minded investors expect board oversight, structured milestones, and recurring reporting. These features can — and should — be embedded into QOZB agreements from the outset to meet institutional standards.

Exit and Liquidity Design‍

Even with the 10-year hold requirement, a QOZB can be structured with internal redemption options, staged ownership transfer, or qualified third-party exit plans — all while preserving eligibility for the tax exclusion.

“When structured with the right team, a QOZB can mirror the upside of a PE deal — and then eliminate capital gains altogether. It’s the kind of tax planning most investors don’t even realize is possible.”

A Natural Fit for Growth-Oriented Capital

For investors comfortable underwriting management teams, business models, and execution risk, the QOZB framework creates a compelling intersection of impact, tax efficiency, and scalable upside. And for family offices seeking operational exposure within estate planning vehicles, it can also offer more flexibility and alignment than traditional RE-focused OZ funds.

QOZBs are not for every investor — but for those with the right advisors, underwriting discipline, and time horizon, they represent one of the most powerful, underutilized tools in the Opportunity Zone landscape.