PE Partnership Terms – Best Practices

Callan, an institutional investment consulting firm, released its Private Equity Fees and Terms Study to serve as a reference for institutional investors.  This study analyzes the terms and fees for 90 private equity partnerships.  Institutional investors can use this information when negotiating and evaluating partnership terms.  According to head of alternatives consulting at Callan Pete keliuotis, “We created this study to help investors evaluate a partnership’s terms compared to those of its peers, which is an especially useful tool when conducting due diligence.”  

The study revealed that more than 75 percent of the partnerships consisted of buyout funds.  When evaluating a potential partnership, the study focused on minimum limited partner commitments, management fees, general partner commitments, carried interest percentage, and hurdle rate.  With the evaluated partnerships, the study found that the fees and terms were largely uniform.  This means that partners with the firm may have a lot of bargaining power within the context of current market conditions.  

About Callan

Founded in 1973, Callan is an institutional investment consulting firm focused on Alternative asset classes, such as hedge funds, real assets, private equity, and multi-asset class solutions.  The firm provides consulting services to endowments, foundations, investment managers, and independent investors.  Callan currently manages more than $2 trillion in total fund sponsor assets.  This makes it the largest independently owned investment consulting firm in the United States.