Starting this thread to gain some market insights. My firm has been around for 12yrs but started operating as a PE fund 4 years ago. We've launched 3 funds over the past 4 years and with total equity checks of about $1.6B (inclusive of forecasted commitments in current fund). Should have $2.5B+ AUM at YE.
In our first fund, the GP (CEO, founder) kept 80% of carry and distributed the remaining 20% among the team. In fund II and fund III, the GP kept 70% of carry. On top of that, since we're not quite fee neutral yet from an opex standpoint, the GP is using management fees to fund the business as well as his GP commitments. Any excess is distributed to his personal accounts until needed for operations. We should be fee positive beginning later this year and I hope some of the management fee excess will be distributed to the firm as well.
I was wondering if I could get some insights from the community on how their firm distributes fees / carry. Is my firm near market? Seems pretty far off to me... Thanks!
Surprised he was able to attract good high-level talent while hoarding that much of the carry pool. If you listen to interviews with founders of investment funds, they'll bring it up as a frequent point of regret or big win (higher split).
There are a few good preqin reports floating around on fee structures for vanilla buyout BTW. Some are a little dated but you might be able to source newer versions through a friend.
Yeah since the PE fund structure is relatively new, a lot of the big dawgs were here beforehand and not many have been added subsequently. I feel like they all get a good chunk of the allocable amount, but peasants like me see breadcrumbs. I'll see what I can find digging through some reports but figured I'd ask the group. Thanks!
Well, I get not giving anyone below say VP or a step up from that much carry but usually for new funds they have to be generous to get people to leave their name brands behind to join a startup.
Agreed. That is a huge amount to keep, especially over a few funds at that size level. Must be nice having $1bn+ DAW.... haha.
3 funds in 4 years? Are these actual funds or is it an independent sponsor model?
At my previous shop the founder kept 95% of the carry - he was a total fkn prick.
Actual funds. $500M, $1B and $1.5B est AUM across the three funds. Levered to the tits.
Nihil consequatur soluta ut unde cupiditate. Perspiciatis ducimus ut autem quia tempora officiis saepe. Numquam dolores ut est quis in consequuntur ullam.
Qui et ab aut dolores mollitia dignissimos. Aut fugiat at nobis eos mollitia optio. Dolore eaque aliquid necessitatibus.
Similique officia totam eligendi autem quo. Facilis ut doloremque quos qui est placeat.
Voluptate et nemo aliquid cumque et quo in natus. Rerum excepturi consequatur dicta. Ut qui soluta dicta nisi libero iusto.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...