Carry Upped to 25% At Some Mid-Market PE Firms
By BankersBall on Apr 11, 2007 in Salaries
Genstar and KPS are among middle-market PE shops that have raised their carry from 20% to 25%, according to this headline from BuyoutsNews (via DealBook). Rationale is to keep talent from jumping to larger firms with larger funds / deals (and the draw of greater potential carry at a lower carry %) in exchange for capping fund sizes. From an LP perspective: the pros — LPs don’t have to spend time looking for another firm in that investment/asset class, they have an in at a firm that’s established in that class (whereas if they have to find another mid-market fund to invest money, they’re probably doing it at an unproven firm). The con — smaller share of return.
Heard of any other firms doing this? Comment below.
On Apr 12, 2007, bsd said:
If I was one of those LPs I would take a careful look at how the carry is distributed within the firm. If the bulk of the carry is highly concentrated in a few sr professionals, then the whole argument of upping carry to retain team members is moot. If carry is distributed in an equitable manner you’d expect an LP to push for better terms elsewhere - namely a higher priority return (put your money where your mouth is), lower fees, etc.
On Apr 12, 2007, joshy said:
http://en.wikipedia.org/wiki/Crystal_Gail_Mangum