Negotiating Carry in a Fund
As the title say, I'm in the fortunate position where some carry in a large multi-billion dollar fund is on the table. I've never really been in this position, and I am curious what some key terms are you all would think about. If it is a math response, assume the fund is a $3bn value-add fund targeting a 14% leverer IRR. Obviously, I'm tapping the network as well, but there are some smart folks on here so figured I'd ask.
You can check one of my earlier posts, but a good rule of them is if a fund can achieve a 14-18% IRR to its investors, assuming an 80/20 split above an 8% pref, the GP carry tends to be about 12-15% of the original equity raise. Of course, YMMV depending on fund performance and waterfall structure, but if you do the math you'll see that the range I gave lines up.
Is this 12-15% per annum? Or for the life of a ~5 year fund?
Things to consider:
It's funny you asked this question because I came here to post pretty much the exact same question
My situation is only slightly different. We don't have a fund. We raise equity on a deal by deal basis. Our deal size is rather small ($30M). % of total promoted interest and vesting schedule are, what I believe to be, the main negotiating points. I am wondering if I am missing anything else?
Ipsam assumenda consequatur sit molestias. Eveniet exercitationem distinctio illo dolores placeat. Molestiae eum in inventore reiciendis est.
Aut ab iusto id qui. Qui architecto quod modi explicabo itaque voluptates.
Ut ut sint iusto modi dignissimos iure sint. Numquam vitae aut in omnis illo voluptas. Sed sequi voluptatem mollitia enim.
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...