Explain Carry in simple terms
So I understand the basis of it but can anyone use a ELI5 real life example of how much someone can potentially earn with it at a shop? Take say someone in a position with equivalent to “entry level” carry (maybe a Director?) not an MD.
For example, really simple one.., if the said person receives X% carry and the firm acquires a $50MM asset. They then sell it in 5 years for $60MM. That firm is GP with 10% in the deal or $5MM of initial equity. Let’s say no debt to make it simple. So the GP profit before any closing costs are then $6MM. How much does that person then earn? Is it part of a YE bonus?
Hi Associate 1 in RE - Comm, any of these threads helpful:
More suggestions...
Hope that helps.
You’re kind of halfway there with your example.
Your math is a bit hard to follow - but the idea is:
capital first before the IRR is positive.
Look up “fund / LP waterfall models” and it’ll lay it out for you
Asperiores tenetur qui est dolore tenetur necessitatibus nisi consequatur. Sed quis voluptas sed. Modi enim itaque ut laborum.
Fugiat doloribus voluptatem quia odit ea nisi ratione. Similique nesciunt sed et et vero assumenda officia.
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...