Video: Variations to Traditional 2 and 20 Fee and Carry Structure

Variations to the Traditional 2 and 20 Fee and Carry Structure

Tom Angell, Practice leader of Withum’s Financial Services Group, discusses current trends in fee arrangements for funds and the different structures seen in the industry.  The traditional structure has been a 2% management fee and 20% carried interest fee arrangement, however, sometimes there are 1.75% and 25% structures, or Limited Partner negotiations for agreements with differing fee thresholds after meeting initial returns. Some LPs are negotiating fees to be on invested capital.  The standard 2% management fee and 20% carry fee remains the most common, however, with a surplus of investor money in the current market, we may see more changes to structures to continue to attract capital.