For example, let’s say a $1Bn fund returns a 2.0x MOIC after 10 years and receives $20MM in management each year (i.e., 2% of fund size for simplicity). Assuming 20% carry, is the right “gain” figure $1Bn or $800MM? If the latter, would it be fair to say you’d essentially need to gross up any applicable hurdle rates (so an 8% hurdle is really more like a 10% hurdle?).
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