Has anyone been scammed on carry and not been provided carry docs to sign?
I seem to be hearing from a lot of my friends who joined newer / smaller funds at the VP+ level with a promise of carry in the offer letter that their definitive carry docs were never provided 1-2+ years into the role, and many have gone multiple years of having no idea how much (if any) carry has been vested. Has anyone else observed this? what recourse do people have another than just quitting?
Established megafunds / UMM shops that are more institutionalized with HR personnel tend to be transparent and provide docs shortly after joining - but smaller shops seem to be just run by 1-2 founders who can do whatever they want with comp?
Yes. Happened to me. Ain't a pretty story.
Do tell!
This is the massive downside of joining "smaller shops" like yeah Apollo and friends rape you with work, but at least you know what you're making and honestly, it's better that way
Agreed. Too much reputation damage for a big shop to screw someone. Smaller shops do it all the time. If anyone ever says "we are entrepreneurial" be sure to run.
Agree with you there man, I don't trust anyone managing less than $5bn AUM bc of this, aiming for UMM and smaller "mega funds" that do like $15bn to $30bn because the thought of getting screwed by CEOs/PMs that are trying to sell me on some spiritual "self starter" bullshit fuckin sucks, I rather be a slave to more established company as long as the check comes in.
Yes, common practice is smaller shops. Agree with others this is an advantage of joined an institutional PE fund.
The longer the carry docs are created, the less favorable they tend to get.
Your choices are hang in there/agitate or leave.
Surprised and disappointing to hear that this is pretty common. Are carry docs that difficult to set up? Would it be unreasonable to ask for finalized / signed carry docs prior to start date?
I'm at a LMM firm and it took a year after carry grant to actually get the docs. The head partner kept saying it was going through our lawyers / CFO review, which I think was somewhat true but when you're at a small firm, those types of things get pushed to the back when you're in deal sprinting mode. FWIW, the head guy is fair and generally a good guy.
Yes, though I joined at a more junior level so I was less inclined to press the issue; when I interviewed the response was basically "the structure isn't formalized but don't worry, you'll get your share." It's something that I'll be closely monitoring as I progress in my current role
If the firm has over $100mm - $250mm in AUM this really shouldn’t be that delayed, especially if they have other people on the team… I’ve done carry-like docs in 60-90 days and don’t get why it would take that long unless the founder is being lazy about it and keeps pushing it back. IMO it’s not a good way to treat your team…
Completely agreed. I was not happy about this but bonus was very generous at the time so I think that was a way of saying "Sorry but great job". It did irk my colleague more than myself.
What happens to your carry when you leave before it's fully vested and paid out? Most associates seem to only be at PE's for 2-3 years
In my experience this story is 100% true, at least in sub 1-2bn funds.
In my case it took 2 / 2.5 years from "handshake" to signed contract. I heard worst stories (>3 yrs), most of them revolving around the same theme of "the CFO / the Counsel is reviewing them".
However, when the time to sign my carry documentation came, a large portion of the allocated carry was considered already vested at signing (even more than the pro rata of time elapsed since "handshake" vis-a-vis the vesting schedule), which somehow made me think the delay was mostly due to real complexity and "organisational economics management", rather than a desire to "scam" me (as per the title).
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