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How to Accrue Early Non-Realized Performance for Late LPs in a Fast-Closing Context?

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Community Member
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May 03, 2023
*- accrued perf to late LPs -* Hello I am unsure how to formulate it and if relevant in our context of closing quickly. One prospective LP asked me my formula to accrue early non-realized perf to late LPs joining. I answered that • there is no NAV so no such computation • i intend to do the final close in less that 12 months • all LPs get the same perf Did I miss something?
1 answer
Community Member
Accepted Answer
May 03, 2023
It appears that the limited partner is asking for there to be a penalty or catch-up fee for late entrants into the fund. You can simply response that you are not adding any penalties or catch up fees, as you your intention is to close quickly and keep fund admin complexity to a minimum. With most smaller funds the costs of administering such programs can be high, and, worse, the programs scare aware qualified LPs. In general, we strongly discourage this until you are an established fund manager with top returns.

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