Fees & Fund Structures

Private equity funds have layered fees and a specific order for splitting profits, called the waterfall. Here is how management fees, hurdle rates and carried interest work, and how they affect investors’ returns.

The fund structure

A private equity firm acts as the general partner, managing the fund. Investors are limited partners who commit money for about 10 years. The firm calls capital as it finds deals and returns money as it sells companies.

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