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Bailey McCann, Opalesque New York: A new study from institutional consultant Callan shows that not only do private equity firms charge high fees those fees can also vary significantly.
According to Callan's "2024 Private Equity Fees and Terms Study," 90% of private equity funds have carried interest provisions of 20%. However, venture capital funds can charge more 25-30% in some cases.
During the investment period, the median management fee was 1.75% to 2.00%, which is consistent with prior Callan studies. Fees after the investment period dropped by 20-25 bps. This fee also varies widely by strategy type. Every fund in the dataset offset management fees by any transaction, monitoring, or other fees paid to the general partner, and the vast majority had a 100% offset.
$10 million remained the most common commitment size from LPs. The average was $8.8 million.
Callan added two new categories to the study this year - fund of funds and secondaries. Both types of vehicles have complex fee structures. Given they charge two layers of fees, fund-of-funds management fees tend to be lower than direct partnerships, with an average of 0.76% during the investment period and 0.70% post.
Secondaries funds typically charge higher fees than diversified fund-of-funds, with management fees averaging 1.07% during the investment period and 1.04% post.
The primaries sleeve of a fund-of-funds typically charges the lowest carry (often 0% or 5%), while the secondarie...................... To view our full article Click here
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