Two questions regarding how carry usually works at middle-market PE funds, particularly at the Sr. Associate / VP levels: 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 that work? What is most common in terms of vesting schedule? And if you leave, do you typically keep all vested carry without having to pay something for it (like what's required with startup options)?

I'm sure this varies wildly across funds. My experience joining a prior fund laid out below (I came on as an Associate, but the fund was relatively new - although not brand new). I still got carry on cash that was already deployed. Rationale there being even though you didn't make the investment, you still had to manage it on an ongoing basis. The fund was ~2ish years old when I came in, so there were no exits, so it made it simpler. My vesting schedule was: 20% on a one-year cliff; pro-rata vesting on a monthly basis thereafter (up to 90%); Final 10% at end of fund life.

My quick experience: Joined a fund about 12 months before closing new fund. No carry in existing/prior funds (despite investing/exiting from those funds for those 12 months), but understanding was that I would receive carry in the new fund. Bit of a gamble since nothing was guaranteed when I signed on (and didn't know the carry amount or fund size), but has worked out. I think the Heidrick NA PE comp study has some stats on vesting, but mine is a 7-year straightline.

Carry Timing

Two questions regarding how carry usually works at middle-market PE funds, particularly at the Sr. Associate / VP levels:

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 that work?
What is most common in terms of vesting schedule? And if you leave, do you typically keep all vested carry without having to pay something for it (like what's required with startup options)?

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saconsult3

PE

7y

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I'm sure this varies wildly across funds. My experience joining a prior fund laid out below (I came on as an Associate, but the fund was relatively new - although not brand new).

I still got carry on cash that was already deployed. Rationale there being even though you didn't make the investment, you still had to manage it on an ongoing basis. The fund was ~2ish years old when I came in, so there were no exits, so it made it simpler.
My vesting schedule was: 20% on a one-year cliff; pro-rata vesting on a monthly basis thereafter (up to 90%); Final 10% at end of fund life. Various accelerations based off liquidity events, etc. I didn't have to pay anything to keep my vested carry when I left.

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Capitol86

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