PE Carry Comp Insights
I’m approaching VP promo and curious to know what the market rate is for vp carry at $500-$1bn latest fund size. I’m talking in terms of dollars at work (daw). Should it be around $3-5m daw assuming the standard calc assumptions (2x MOIC, 5 yr, 20% carry, etc)?
$3-5M DAW sounds about right to me
Very few instances where a VP is getting close to $5M in carry DAW at a sub $1Bn fund. If closer to $500M, no way.
This is wildly off.
20% carry?! Nobody is getting that level of carry unless you run the shop.
As a VP, you might get 50-300bps of carry.
So using your example of $500M fund and assuming a 2x MOIC, you are getting closer to between $500K and $3M of carry dollars, ignoring other fees.
For a 500-1bn fund that sounds rich
Market for that fund size should be around $2m
How long does it take the full DAW to realize?
^ curious about this considered about how much DAW you have for a relatively small fund
Depends on how it takes your fund to sell their companies
For avoidance of doubt this only applies to American waterfalls right? For European waterfalls you would need to wait for the fund to be liquidated (vs. just clear the hurdle on the former)?
Check pg. 18-19 of the below link. 1-2M DAW seems market. I think $3-5M DAW is more UMM+ for the early VP years, with the top-end more in-line with the non-publicly traded megas (e.g., CD&R, Advent, H&F)
https://www.heidrick.com/-/media/heidrickcom/publications-and-reports/n…
20% carry?! Nobody is getting that level of carry unless you run the shop.
As a VP, you might get 50-300bps of carry.
So using your example of $500M fund and assuming a 2x MOIC, you are getting closer to between $500K and $3M of carry dollars, ignoring other fees.
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