Private equity compensation structure
In America especially, private equity firms are compensated through a "2 & 20" system in which they get 20% of profits which are in excess of an agreed level (and 2% as base management fee). My question is whether or not this 20% compensation system is also a thing in UK (common in UK private equity business)
Yes, same model but on a fund as a whole basis.
In US, it is market to have carry on a deal by deal basis, while in UK/EU the fund as a whole needs to hit the hurdle to get 20% carry (ignoring catch up specifics).
Does that mean that PE firms in US earn more carry income than in UK?
And does that translate to mid/senior-level comp difference between countries?
Follow-up question: do Rothschild PE funds follow this 2/20 mgt/carry structure?
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