Thought Leadership & Insights

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Terms & Alignment

Where Fees Meet Value

Well-structured investments align the interests of managers and investors over the long term. Beyond evaluating the strategy, advisors should understand how an investment’s economics, governance, and legal terms shape incentives, decision-making, and investor protections. A disciplined review looks beyond headline fees to determine whether the structure reinforces accountability, supports long-term value creation, and aligns with clients’ objectives.

Consider these key questions:

• Management fee and carry. Are economics in line with the strategy and its peer set? Is the fee base appropriate (committed vs. invested vs. NAV)?
• GP commitment. How much capital is the GP putting alongside LPs and from what source?
• Hurdle and waterfall. Is there a preferred return? How is that structured against the strategy?
• LP rights and governance. What are the LP advisory committee rights, key-person provisions, no-fault termination and amendment thresholds?
• Side letters. Are most-favored-nation rights provided and what is the firm’s practice on disclosure of material side letter terms?

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Disclosure: Information presented is for educational purposes only, are subject to change from time to time and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future performance.