Caregories, Characteristics And Compensation

Question 1

Hurdle rate

Answer 1

Minimum rate for GP to get the performance fee

Question 2

Clawback Provision is a term that requires:

Answer 2

PE fund to RETURN
any funds distributed
As a incentive fee

UNTIL

the GP the limited partners received their:
intial investments
Contracted portion of the total profits

Question 3

Compensations Structure (comitted, management fee) (3)

Remember water Mark

Answer 3

Private equity funds -

Comitted Capital
NOT invested capital
Reduces the incentive to deploy the comitted capital (reduces fee)

Hedge Funds
Fee based on AUM
Plus Performance Fee
(Surplus of Hurdle Rate) or
Hard Hurdle Rate

Water Mark
Fee only if the FM exceeds its historical maximum

Question 4

Method Wich profits are distributed between LPs and GPS

Answer 4

Water fall method.

80/20 split

Question 5

American Waterfalls funds
(Deal by deal waterfalls) characteristics of Payments:

Answer 5

Performance fees after every deal