Two questions regarding how carry usually works at middle-market PE funds, particularly at the Sr. Associate / VP levels: If you join a firm when the current fund is 50%+ invested, do you still get carry (assuming you otherwise would)? Is the amount typically reduced proportionally, or how does that work? What is most common in terms of vesting schedule? And if you leave, do you typically keep all vested carry without having to pay something for it (like what's required with startup options)?

I'm sure this varies wildly across funds. My experience joining a prior fund laid out below (I came on as an Associate, but the fund was relatively new - although not brand new). I still got carry on cash that was already deployed. Rationale there being even though you didn't make the investment, you still had to manage it on an ongoing basis. The fund was ~2ish years old when I came in, so there were no exits, so it made it simpler. My vesting schedule was: 20% on a one-year cliff; pro-rata vesting on a monthly basis thereafter (up to 90%); Final 10% at end of fund life.

My quick experience: Joined a fund about 12 months before closing new fund. No carry in existing/prior funds (despite investing/exiting from those funds for those 12 months), but understanding was that I would receive carry in the new fund. Bit of a gamble since nothing was guaranteed when I signed on (and didn't know the carry amount or fund size), but has worked out. I think the Heidrick NA PE comp study has some stats on vesting, but mine is a 7-year straightline.

Carry Timing

Two questions regarding how carry usually works at middle-market PE funds, particularly at the Sr. Associate / VP levels:

If you join a firm when the current fund is 50%+ invested, do you still get carry (assuming you otherwise would)? Is the amount typically reduced proportionally, or how does that work?
What is most common in terms of vesting schedule? And if you leave, do you typically keep all vested carry without having to pay something for it (like what's required with startup options)?

Add comment

Start Discussion

2 Comments

saconsult3

King Kong

PE

5y

Most Helpful

I'm sure this varies wildly across funds. My experience joining a prior fund laid out below (I came on as an Associate, but the fund was relatively new - although not brand new).

I still got carry on cash that was already deployed. Rationale there being even though you didn't make the investment, you still had to manage it on an ongoing basis. The fund was ~2ish years old when I came in, so there were no exits, so it made it simpler.
My vesting schedule was: 20% on a one-year cliff; pro-rata vesting on a monthly basis thereafter (up to 90%); Final 10% at end of fund life. Various accelerations based off liquidity events, etc. I didn't have to pay anything to keep my vested carry when I left.

Reply

Quote

Report

Other

Authored by: Certified Private Equity Professional - Vice PresidentCertified Private Equity Pro

Capitol86

Gorilla

PE

5y

In natus et vel nobis omnis voluptatem. Animi occaecati assumenda accusamus ea unde aut eligendi id. Illum enim consequatur omnis perferendis animi est.

Deleniti laborum molestiae tempore repellat voluptas vitae. Quos explicabo placeat ut aut ad dolor et a. Voluptatem iure quod rerum voluptate consequatur quisquam. Aut enim alias quisquam esse porro omnis nobis.

Expedita ab at minus non. Quae est placeat aut fugit cum laudantium vel ipsam. Sit vero est sit ex. Aut eligendi et ea placeat sed sed deleniti. Eum quia reiciendis modi perspiciatis molestiae fugit cumque. Aspernatur commodi minus consequatur.

Reply

Quote

Report

Other

Authored by: Certified Private Equity Professional - PrincipalCertified Private Equity Pro

Add comment

Start Discussion

Career Resources

+156	Is MF IR becoming a front office role?	PE	68	7h
+71	Search funds: "like shooting fish in a barrel" (from ex-F100 CEO)	PE	25	11h
+33	My Journey From Non Target To BB Tech IB, And To Elite PE Thereafter	PE	21	2d
+28	Leave MBB to to join PE-backed Portco?	PE	10	2d
+25	Sweaty funds - how do VPs work most weekends?	PE	11	2d
+19	Should I try to lateral for better exit opps or just recruit directly for pe at my current shop?	PE	5	1d
+18	Infra PE salary London	PE	21	1d
+16	impact of on portco from different entry points by PE firms	PE	4	3d
+14	Favorite/Best Moats in Consumer Brands?	PE	8	12h
+14	Renewable Energy Developer to Private Equity?	PE	4	1d

1	redever	99.2
2	Betsy Massar	99.0
3	Secyh62	99.0
4	BankonBanking	99.0
5	kanon	98.9
6	CompBanker	98.9
7	dosk17	98.9
8	GameTheory	98.9
9	numi	98.8
10	Kenny_Powers_CFA	98.8

Carry Timing

See All Comments - 100% Free

Trending Content