Napkin Math Valuation
Trying to estimate a HFs EV. Variables I have are AUM and firm wide blended fee rate - mgmt fee and carry. Will calculate pro forma carry per annum that’s crystallized based on simple waterfall assuming similar performance as the Fund’s annualized since inception. What’s the typical EBITDA margin for a smaller HF (call it in the sub 10b range) which runs very lean and has limited overhead outside of employee costs. Also what’s are appropriate multiple tiers to use based on AUM scale (I.e., 1-2b is x, 3-5b is y, 5-7b is z).
Lol. Is this a joke?
Barely any HFs have going concern value. Maybe a handful.
That’s what I am trying to figure out. Any excess cash is siphoned. HFs that don’t have drawdown vehicles will have greater revenue volatility but there has to be some recurring nature or liquidation value that you can assign with gating and lock ups. Also premium for long term performance stability and AUM growth assumption. I assume that most GP staking activity is bias toward HFs with drawdowns. Equity would dividend themselves out each YE after feeding employees? So look at operating margin prior to discretionary employee payments?
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