This edition presents the MJ Hudson LP Unit review of key economic and non-economic terms across a representative sample of private equity funds that have come to market between April 2016 and the date of this report. Although the data in this report is aggregated from funds encountered by MJ Hudson through our advice to their managers and investors, commentary in the report draws also on our team’s broader investor advisory experience.
The report looks at core matters of GP/LP economic alignment: GP Commitments, Management Fees, the Hurdle Rate (aka Preferred Return), innovations in Carried Interest and the Distribution Waterfall (including Catch-up). As we expect LPs overall to increase their allocations to U.S. funds, we pay particular attention to Deal-by-Deal enhancements i.e. Interim Clawbacks (including related issues of single vs. multiple interim clawbacks and FMV tests), carry escrows and guarantees of GP clawback obligations).
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