Management Fee and Incentive Structures

We begin with the fund mandate, deployment profile, and investor base, then convert that into a fee architecture that is defensible, transparent, and bankable. Base fee levels, breakpoints, step-downs, offsets, and expense classification are engineered as one system. Documentation in the LPA and side letters removes ambiguity on what the manager can charge and when. The output is a model that regulators, LPs, and auditors can test without destabilising the GP business.

We align carry and waterfall terms with the fund’s strategy, duration, and risk profile, while preserving enforceability and operational clarity. Hurdle rates, catch-up, preferred return, escrow, and clawback are designed as an integrated sequence, not standalone clauses. We ensure distribution rules can be executed by administrators without discretionary interpretation. The result is a waterfall that allocates value exactly as intended under both base case and stress scenarios.

We structure mandatory GP commitments, co-invest rights, and management participation so that real risk and upside are shared, not simulated. Vesting, lock-ups, and downside exposure are calibrated to the time horizon and liquidity profile of the strategy. We then embed these mechanics in governance documents, shareholder agreements, and side arrangements. This converts “alignment” from language in a deck into binding, measurable obligations.

In family offices and holdcos, incentive design must balance commercial performance with family control and continuity. We build frameworks that reward value creation at asset and platform level, while enforcing guardrails on leverage, concentration, and exit timing. Structures typically integrate profit participation, phantom equity, or LTIPs rather than pure carry. Governance terms ensure the family can adjust strategy without triggering economic disputes.

Yes, we run a full diagnostic on current economics, governance, and performance outcomes, then design a transition path to a sustainable structure. This often involves recalibrating base fees, resetting carry, adding or tightening clawbacks, and cleaning legacy side deals. We manage renegotiation dynamics across GPs, LPs, families, and management to preserve relationships while re-basing economics. Legal documentation then locks the new model with clear sunset provisions for the old.