You can now download the complete 4th edition of MJ Hudson’s Fund Terms Research, featuring all three individual parts released this year: Economics, Alignment and Governance.
In Part I, we focus on the core economic terms of investment funds: management fees and discounts; hurdle rates; carried interest and escrows; and clawbacks of carried interest. We note the key trends in the market and the movement in rates, prevalence, and investor friendliness of the terms and how the core terms compare to prior years’ research.
In Part II, we share our research and views on how the alignment of interests between investors and fund managers is safeguarded. We discuss the size of the GP (sponsor) commitment, including analysis of the differing levels of commitment between first-time funds and successor funds, as well as levels of commitment by fund type. We also examine additional alignment mechanisms, including management fee offsets, change of control, and distributions in kind.
In Part III, we consider the internal governance of private equity funds and examine current trends in the key investor protections: GP removal (with cause and without); key person events; and the application of the most favoured nation treatment. How decision-making and governance is implemented and conducted by fund managers, and the extent to which investors are involved and have visibility and control over the operation of the funds, will all be examined.
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