Was talking to a few senior people at my fund and they were complaining about the misalignment between our funds and our corporate + the shareholders. In the past 5-10 years, there's been a big push to aggregate AUM and collect larger management fees rather than pushing for great deals with high returns since recurring revenue on management fees is more accretive to a stock price than the one-time event of exiting a deal. As such, corporate takes a large portion of the fund's management fees to pay to the shareholders as dividends while investors and employees of the fund are mostly comped on carry.
Doesn't this seem like a fundamental flaw in incentives for a fund with public shareholders? Why would an LP invest with a firm who has a clear prerogative to just grow AUM rather than drive the best returns possible on their invested equity? Why work for one if your carry is impacted by the need to satisfy corporate shareholders and retail investors?
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