In regards to the compensation economics, which has better carried interest economics? The founder of a $1 bn private equity firm or a rockstar partner at a top 5 MF ($80+ bn in total AUM across the PE strategy)I would assume it’s a MF partner, no?
Founder 9 times out of 10. Owning the management company > a few checks of carry.
Works at Lazard Freres
3y
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So much of the answer depends on performance and you’re probably more likely to have a 7/8x fund with a smaller fund. It’s just easier to turn $1B into $8B then it is to turn $25B into $200B (everything from exits being other private buyers at the smaller end to IPOs at the larger - which are harder to get your money out of, to smaller deals often being cheaper - but there is more competition for smaller companies as well… not as many people can do $12B deals). There are just a lot of variables to consider.
But say they both 3.0x a founder at a $1B fund probably gets 50% of the carry( $200M), a top partner on a $25B fund gets ~2.5% of the carry and that might be aggressive ($250M)
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Founder 9 times out of 10. Owning the management company > a few checks of carry.
So much of the answer depends on performance and you’re probably more likely to have a 7/8x fund with a smaller fund. It’s just easier to turn $1B into $8B then it is to turn $25B into $200B (everything from exits being other private buyers at the smaller end to IPOs at the larger - which are harder to get your money out of, to smaller deals often being cheaper - but there is more competition for smaller companies as well… not as many people can do $12B deals). There are just a lot of variables to consider.
But say they both 3.0x a founder at a $1B fund probably gets 50% of the carry( $200M), a top partner on a $25B fund gets ~2.5% of the carry and that might be aggressive ($250M)
Saepe aut modi corrupti. At vitae quod deleniti in voluptatem iure omnis totam. Fuga non eos molestias neque nemo. Sapiente perferendis qui occaecati qui voluptas reprehenderit aliquid voluptatibus.
Eum facilis ratione cupiditate hic. Nostrum sint vero id est sint perspiciatis. Dolorem velit asperiores distinctio blanditiis atque laborum est. Non laudantium occaecati est repellendus. Et dolore est ratione magnam.
Vitae dignissimos mollitia sunt modi. Est quidem vero dolores quos.
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