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Biden wants to close carried interest loophole for hedge fund and private equity executives
From the NYT: https://www.nytimes.com/2024/03/12/business/dealb… Biden called for raising $5 trillion in new taxes on companies and the rich, including: Raising the corporate tax rate to 28 percent from 21 percent, where it was set in 2017; Increasing the corporate minimum tax to 21 percent, up...
Carry
I am in a somewhat unique position as the second man in a PE fund (target $300-$600mm) for which my firm is about to enter the market. I spent 2 years in IB and have been at my fund for ~3 years now - my title is still Associate and we do not have a Senior Associate title. My review is coming up in...
Carry DAW Question
When carry DAW is quoted, my understanding is it is generally calculated as (% Carry Pool) * (Fund Size) * 20% (assuming 2x fund). However, most PE funds do not fully deploy their funds. Should you be applying the industry average "actual" deployment percentage to haircut your theoretical actual...
PE megafund compensation policy for forgone unvested carry
To the experienced PE guys here – what are the latest market practices regarding compensation of foregone un vested PE carried interests by the new megafund PE firm you join? I’m interested in actual data points when joining a megafund based in the US or Europe, for a VP/Principal position, when...
Carried interest contingent upon staying with the firm?
New to VC here, just started a gig in Corporate VC in the East Coast. Carried interest. I don't get to have that and I want to know more. If I join a financial VC one day that gives me carried interest, then what happens if I stay there for like 3 years and then that firm subsequently? Do I lose all...
Carry Vesting / Non-Compete Terms
I recently joined a fund and the carry agreement they are offering includes terms that note if I join a voluntarily resign and join a competing PE fund (broad definition) all unrealized carry (both vested and unvested) is forfeited. Is this market? Curious what others have / have seen. Seems pretty...
Typical Carry split: Management vs Investing Team
Hey WSO, Had a quick question for those with carry. I work for a special sits credit / structured equity fund and was just allocated my first point of carry and noticed on the carry statement that the management team (CIO, and founding IC members) take 75% of the carry pool and the rest of the...
Carried interest agreement
Hey guys, I'm currently finalising my carry agreement with the firm and I'd just like to bounce the terms off the kind folks here and see if there's anything I'm missing or isn't market. It's a pretty simplified document (I'm not sure if this works against me), and currently the areas covered are:...
Incentive to Use American Waterfall Returns (per Deal as opposed to per Fund)
What is the incentive for limited partners to participate in funds with american waterfall carried interest that applies to individual deals as opposed to the aggregate fund. LPs could pay carried interest on individual deals despite a total fund return below a hurdle rate or even below zero.
RE Acquisitions - Promote/Carried Interest Comp
Hey all - Trying to gather some intel on promote/carried interest compensation structures for sourcing roles (ex. VP/Director and up) at institutional RE shops. I've spoken to a lot of peers in the industry (generally ~$5 - 50bn AUM investment managers), and there seems to be a ton of variability,...
Carry Compensation - How Much to Expect, Vesting, etc.
How do you typically see carry offered as compensation? What level does this start to factor into compensation packages? Are you receiving a percentage of the total GP profit on a project or fund basis, or only a percentage of the promote? Does this differ between a dev. shop vs. REPE fund? I am...
Associate asking for carry
I'm an associate at a non-coastal growth equity firm. Recently sourced a major deal for our fund, will be investing $20M+ into a growth-stage tech company. I already have carry in the fund (instead of annual cash bonus), but am curious how to go about asking for a carry grant in this specific deal,...
American Hybrid Style Realized - Deal Waterfall
What are the differences in the mechanisms for LP-GP distributions between: 1. European Waterfall 2. American Hybrid Style Realized - deal Waterfall 3. American Full Waterfall Thanks,
Exit Terms for Carry and Fund Interest
What do people normally see offered on their vested carry and funded GP commitment when they resign from a firm? Being asked to sell back my fund interest at face value of my capital contributions (valuation has appreciated a lot since date of investment). On vested carry, they are saying I keep the...
Receiving LTIP
Just got an offer from an early stage investor for an Associate level position. It includes a decent chunk of your salary as potential bonus in the form of LTIP (in addition to a cash bonus). Is this typical? Also wondering, what’s the difference between LTIP and carried interest (which would be...
Question on carry
I'm breaking into PE at the senior associate level and will be joining a firm that just closed their 3rd fund (~$1bn commitments). I've been told that at the VP level (~2 years from now) that I'll be offered carry. Should I expect to be offered carry in the current fund, which I will have a part in...
Paying for Carried Interest Unit
My PE fund (Europe) make us pay to aquire carry units, anyone else in this situation? Each carry unit is worth PS10,000 and gets allocated depending on seniority level then we get paid back at the end of vesting period. Do you find it normal? Sounds that carry shares are usually given as a bonus in...
Asking for carry - how and when to do it
I am a senior acquisitions associate at a small but successful development shop. I’ve been with the company four years and am now the CEOs right-hand man in many respects. He has repeatedly mentioned that I am very important to the company and that he knows I’ll be asking for carry at some...
Interim Promote
So I was speaking to a friend and he says his company does an interim promote (rather than a crystallization). Basically, it's when a recap event occurs (refi or supplemental loan), they agree on a value and run it through the promote model. They calculate a total promote and pay themselves half of...
Help w/ typical carry + coinvest profit example for VP?
Hi everyone, Long time lurker here and beneficiary of the WSO forums. I'm a college senior/incoming banking analyst and would like to estimate a typical "VP" carry and coinvest package for a typical middle market PE firm for one of my classes. All illustrative, and I'm familiar with the general...
As a GP in a rollup, what should I negotiate with my investors?
Dear all, I’m working on a buildup project in a quite fragmented healthcare niche. Our goal is to acquire 60 companies in 5yr. After several negotiations we decided to raise funds using the classical 80/20 carried Interest model. We will raise a first round of $20M at nominal value so dilutive...
Demystifying Carried Interest Calc
WSO Community, Hope everyone here is doing well. I'm looking to get a second opinion on my calculation of potential carry (picture of my calculation attached). Here, I'm assuming the following: LP Commitment: Assumed to be 95% of total fund (i.e., $475M of $500M fund) Management fee: 1% of...
Carried Interest Taxation
So I just read that Biden wants to start taxing carried interest at ordinary income rates. As someone that just reached the holy grail of carry, I'm punching air because it sounds like bs, but tbh have no idea what it means. Was it previously only taxed upon realization whereas now he wants to mark...
Evaluating economics in a fund - carry, phantom equity, etc.
Anybody have good resources on how to get smart on evaluating different fund participation packages? I want to better understand how to think about carry vs. phantom equity, etc. and how to assess different vesting characteristics. Really just trying to get up to speed on the basics and also see if...
Question about carry statistics in PE compensation report
This PE compensation report gives a dollar amount for carry (bottom of page 16, for example). What does this number mean? Is it paid over the duration of the fund?
How are GP Partner economics structured? How much does a partner get paid?
I've been curious for a while how PE partnerships are structured in terms of compensation. Do partners (real GP % owning partners) own a % of the GP and accrue a % of the carry every year? What are the vesting terms for ownership and how does that usually work out? Does a PE fund put a fixed % of...
Carried Interest (Advice / Help!)
Hello fellow monkeys! I have been a long-time lurker (with another account) and have recently come across a situation that I need some perspective on (created this new account to maintain anonymity). The quick two cents on myself, I am a senior associate at a MM /LMM firm that is raising a new fund....
Question about carried interest
I wonder if someone can pitch in and tell me what you think: I own a small business ( less than $3M annual revenue ) and currently in negotiation with a VC to buy 100% of the shares for cash in hand + 30% equity in the new company they will form on top of the one I am selling. I was ready to sign...
Carried Interest on Operating Income?
I work at a family office making direct investments in small businesses. As we're managing wealth for a family only looking to compound wealth over generations, there's no incentive to sell the businesses we buy. I was speaking to a laywer who said instead of compensating ourself with salary we...
Carry Timing
Two questions regarding how carry usually works at middle-market PE funds, particularly at the Sr. Associate / VP levels: 1. If you join a firm when the current fund is 50%+ invested, do you still get carry (assuming you otherwise would)? Is the amount typically reduced proportionally, or how does...
Major Model Meltdown
Hi I run a PE Fund and I am having a heck of a time calculating carried interest. I know what carried interest is obviously but where my problems lie is that I cannot seem to reconcile the data I am provided from my various plan sponsors into an excel model I inherited from an ace modeler/accountant...
Trump/Clinton Ending the Carried Interest Law
I know that will probably take time to pass through (wheels of democracy move slowly), but it seemed like the candidates talked extensively about changing the carried interest tax laws last night. I'm curious if people think this will happen and how it could affect the industry?
At what point/level of career is obtaining carried interest normal?
I know it can vary depending on the firm, but I'm speaking more in general. Example: Location would be major city (think LA, SF, NYC , Boston, DC). The firm in question is 10 years in existence, owned by the three founding partners. Total firm size (inclusive of partners) is 10 (couple accountants,...
Carried interest / carry interest for a $100 - $200mn fund with a 2-3 person team?
Hi there, am hoping to get your view on the appropriate carry structure (as well as base + bonus range) - $100 - $200mn VC fund - I will join before securing anchor LP (i.e., have not started fundraising) - Joining as senior associate (4 years of BB IBD experience) - 1 to 2 partners (depending on...
Vice President Fund Carry/Equity
Hey All- I have been negotiating an offer with a PE firm to come on as a VP. I actually have worked for this same firm before, left for a few years, and now they have roped me back in. They are currently in the process of raising their second fund (sub $500mm target) and since it is still small, my...
Carry not in writing
Does anybody understand the taxation of carried interest in the UK? Recently I have been discussing an offer of a token amount of carry with a mid market PE fund but they have said they will not put this in writing immediately for "tax reasons". They are a reputable/straight forward/trustworthy but...
Carry across Multiple Strategies in Fund
Does anyone have any knowledge on how carry works for funds that have multiple strategies? Do you get carry across all funds or just the fund you work in? For example, if I'm on the buyout fund and we also have a separate mezz fund where we sometimes do joint deals, do I also get a piece of the mezz...
sophisticated carry structure question
have only gotten synthetic carry in the past - but now I can write the agreement so.... Looking for clause for GPs to carve a bit more potential out via excess profit share over hurdle? constants: mgt fee. /mer ratio. 8% hurdle 20/80 split on windup over hurdle and invested capital. note invested...
Contribute to get Carried Interest in PE?
Hi I have a PE job offer for an investment analyst role -- the fund has only two functional roles: investment analyst and fund manager. 1st fund $120mm (80% investments are done), starting a 2nd fund $250mm (70% capital raised). Part of my compensation is carry. I was told that in order to get carry...
Private Equity - Carried Interest?
Have a question for all the PE guys here. I've been trying to figure out if the carried interest I get paid (middle level guy..senior associate/VP) is market. My fund based out of SF focuses on the middle market, but we have a decent fund size (between $2 and $2.5 billion). I receive 0.5% carry on...
Part of carried interest for Sr. Associate/VP in a small PE fund
What percent of the total carried interest do Sr. Associates/VPs usually get in a lower middle market PE funds? For instance $100M fund with less than 10 people - 5 partners, 2-3 manager type of positions and 1 Sr. Associate or VP. Also, if the Sr. Associate/VP were to negotiate other type of...
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