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.


Things to consider:

  • obviously try to quantify the carry; evaluate the risk that the fund actually achieves this
  • term of the fund, when do you think the fund will be "in the money"?
  • payout schedule; will the fund begin paying out carry once it is in the money, or is there a lengthy review process / reserve requirement?
  • vesting schedule of your carry?

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?


Aut eius et non dignissimos nobis molestias possimus. Reprehenderit ut alias tenetur id. Cupiditate odio corporis sed est aut.

Career Advancement Opportunities

March 2024 Investment Banking

  • Jefferies & Company 02 99.4%
  • Goldman Sachs 19 98.8%
  • Harris Williams & Co. (++) 98.3%
  • Lazard Freres 02 97.7%
  • JPMorgan Chase 04 97.1%

Overall Employee Satisfaction

March 2024 Investment Banking

  • Harris Williams & Co. 18 99.4%
  • JPMorgan Chase 11 98.8%
  • Lazard Freres 05 98.3%
  • Morgan Stanley 07 97.7%
  • William Blair 03 97.1%

Professional Growth Opportunities

March 2024 Investment Banking

  • Lazard Freres 01 99.4%
  • Jefferies & Company 02 98.8%
  • Goldman Sachs 17 98.3%
  • Moelis & Company 06 97.7%
  • Lincoln International 04 97.1%

Total Avg Compensation

March 2024 Investment Banking

  • Director/MD (5) $648
  • Vice President (19) $385
  • Associates (82) $263
  • 3rd+ Year Analyst (12) $184
  • Intern/Summer Associate (32) $172
  • 2nd Year Analyst (62) $169
  • 1st Year Analyst (194) $159
  • Intern/Summer Analyst (142) $101
16 IB Interviews Notes

“... there’s no excuse to not take advantage of the resources out there available to you. Best value for your $ are the...”


From 10 rejections to 1 dream investment banking internship

“... I believe it was the single biggest reason why I ended up with an offer...”