Trying to determine which Fund terms are optimal for the GP:

Option I: 8% preferential return to LPs with 80/20 GP catch-up, 50/50 split thereafter

Option II: 9% preferential return to LPs with 100/0 GP catch-up, 50/50 split thereafter

What do y'all think?

Thank you!

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Comments (4)


I'm going to guess option I is better, but doesn't it depend on the size of the deals?


Is this a homework assignment? Think about it man...it depends where your returns end up. If you are looking at 9% return per year for the fund then option 1 is clearly better but draw a diagram of the returns and it should be pretty straightforward.


Scenario 1 is better, more profits to split. The 80/20 vs. 100% catch-up really has no bearing if you have decent returns you will get to the 50/50 regardless. Also depends greatly on if that pref. accrues and rolls into your equity balance at YE, if this is the case, Scenario 1 is even more appealing.

In reply to HFFBALLfan123

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