Curious for more tenured PE folks - when did material, realized carry actually hit for you? ($>1mm of distributions?).
Based on my experience, every early tenured VP gets quoted some spectacular carry numbers - starting at ~$2-4mm and going up from there. But over the years, I've noticed a few things happen:
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People leave - and through one reason or another (unvested, redemption rights), lose a big portion of those carry $
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Illiquidity - no actual realizations for a very, very long-time - much longer than the ~3-5 years marketed
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Fund doesn't hit the 8% hurdle or isn't meaningfully above it so between holdbacks and low realizations, not a significant portion of carry is realized.
What have you all experienced? Are the conditions above more the 'norm' these days than the exception? Just feels like the real value / realization of carry is below to materially below what I expected when I first started in this industry.
At this point in your career, quality of deal experience, upward mobility path, mentorship far exceeds the value of the carry you got allocated - particularly in light of below. So yeah, just think of the carry as nice little cherry on top that may or may not have any value - but 100% do not let that drive any career decisions for you.
Principal in PE here. I've been at two firms in my career and am only now starting to receive carry - I've been doing this for 15 years.
Here are a few pointers:
1. Not all firms pay-out carry at the same time. At my current shop, carry will only be paid in one lump sum at the VERY END of the fund's life as the managing partners don't want to deal with any clawbacks. Our latest fund is a 10+2 and we are half way in so I'm not expecting to see money from this fund for a while. Some firms will pay out carry in real-time once they're in the catch-up but then you may have clawbacks, and frankly it's a pain.
2. Yes, people leave and usually people don't understand just how bad vesting terms and all the legal jargon can be once you do leave. At my old firm we had a 7 year vest which was backweighted, 10/10/10/10/10/20/30, so unless you stay till the end you're not getting your full share. Secondly, often when people leave, senior partners in the firm can buy you out of your vested carry for a different amount - you gotta check the legal docs to understand what you're getting yourself into.
3. What I tell Associates/VPs to think of when it comes to carry is let's say we are aiming for a 2x net MOIC to investors and ~15% net IRR. Now assume our fund is more like a 1.5x and 8% IRR. Now assume you leave after 3 years. So if anyone is telling you you're getting $1mm+ per year in carry assume you're getting like $200k max.
Not quite at the level the OP was suggesting, but have been in the game for roughly 8 years, just got my first carry payout not too long ago. I had a little baby carry allocation from my time as an associate in a fund that is now a few years old and had good early returns of capital - carry check was about $100K. Our carry payments are discretionary in the sense that we don't have to distribute when earned if we want to be conservative/prevent a clawback situation, so think I have more due to me but that's what came out as we get into the harvesting stage (fund on track to be probably ~2.5x gross most likely). Now of course, out of that $100K in carry, $20K goes to the government (about $10K now in estimated taxes, $10K when I do my 2022 filing next year), and then I will have $50K-$60K of that spoken for in my next capital call for the most recent fund with a larger allocation. Of course those are investments so it's not "gone" per se, but not like I have it around to spend. Probably won't get another carry distribution for another 6-12 months just based on where the next round of exits/div recaps are if I had to guess.