Carry Vesting for VP @ Startup PE Fund
Hi all,
Question about time vesting of carry for an investment team member -- see notes below. Our MD asked me to solicit feedback fromPEfolks on what would be considered "market". Honest feedback would be appreciated, as we'll use this to determine my comp. Thanks in advance!
Paul
Question 1: The GP gives an analyst/VP a cut of the deal-by-deal carry at a smallPE资金，与他从事的交易有关。大约有多少时间归属（如果有）被视为“市场”/“常规”？
Question 2: Specific situation. Over past two years, the two of us did 3 small deals together (deployed $25-30mm of equity across the three deals). It's largely just been the two of us -- me + the MD -- doing these deals as an indep sponsor (we are now starting aPEfund). For deal three, the carry is split is agreed as 17.5% / 82.5%. We need to mutually agree on a reasonable vesting schedule for the VP carry. We both have our ideas on what's appropriate, but have agreed to poll the market on "conventional" carry time vesting for a deal team member.
评论 （29)
独立于归属，最重要的是您与您的LP协商美国瀑布（如果可以的话）。对于GP携带竞赛而言，要好得多。
Vesting wise, I've seen 7 year linear vests (from date of first capital call / fund closing) with an acceleration to 60% once the fund is fully deployed. This is common inVC也是。在PEside, have seen some firms do a 5 year linear vest from the time each dollar is deployed. I.e. if you have $bn fund and deploy a $100m check into a company, 10% of your carry vests 5 years linearly from that date. Not sure if this is market-representative, but a couple example structures.
Thanks! Very helpful. Point well taken re: European vs. American style carry.
在这种情况下，我们正在谈论一笔交易的货币。LPS已经同意与GP交易的交易；这个问题仅仅是关于提供给副总裁的携带份额的时间。（稍微编辑了这个问题以澄清这一点）。
Hoping to get at least a few opinions here, so other thoughts appreciated. Thanks again for the help.
Ah gotcha -- in that case, the 5-year linear vest isprobably a good model. Maybe you can negotiate for shorter, but 5-year is pretty standard / market.
I've been at two different funds and have seen four- and five-year vesting schedules, with one-fourth or one-fifth of total carry vesting each year. One of the funds had monthly pro-rata vesting in the event that you left in the middle of the year, while the other did not.
Thanks! I like the pro-rated feature.
@Jelly-澄清我总结回答。这项基金级别的归属（例如10年基金，5年的投资期限）吗？还是在交易结束时触发了这种归属，向前延伸了4 - 5年？
Vesting triggered as of the final close of the fund.
Just went through this exercise.
通常情况下，背心是线性的，并与投资期限的长度绑在一起。我见过的最好的是3年的线性背心，而我看到的最糟糕的是一个7年后的加权背心，其中50％的金额在最后两年中。如果基金达到某些里程碑，例如完全部署，则背心通常会加速。我看到的平均是4 - 5年，有线性背心。另外，如果您是作为独立赞助商的Deal进行交易，那么我认为背心更短。
Thanks! Helpful color. Two questions:
(1) What number comes to mind (understanding that it varies) for an "accelerated" vest once capital is deployed?
(2) For seven year / back-half weighted vest -- were the final two years still capital deployment phase, or was deployment completed in year 5?
It was a 4 year investment period with the following vest: 10/10/10/15/15/20/20. It was pretty shitty tbh and the partner kept saying "value creation doesn't stop when the investment period ends, we need to actively manage and liquidate these companies properly". I mean, I agree, but he didn't have a vest at all so it's easy for him to say that. This was also an annual vest, so of you left 6 months into the year you got no credit.
这里没有太多要添加的东西，但是您不应该在WSO.
Thanks! Appreciate the feedback.
fyi, 17.5% + 83.5% = 101%
啊，数学。谢谢。82.5％。修复了上面。
Agree with what has been said. Deal by Deal is 3 on the fast end and 5 years is probably market. It's also worth mentioning that it's important to know how your carry works once you leave (i.e. you retain vested portion, GP can buy it back at mark, which is always going to be lower than what you could actually get in a realization, etc.).
Good point re: repurchase right. Thanks for the color.
Any additional opinions welcome, as we're still hoping to collect multiple data points.
关于GP回购是否是市场的看法？我知道有两个数据点：一个朋友离开了他的公司，保留了他的既得部分，以便在退出时支付，另一个朋友回购了他的既得携带。
I don't have a great sense TBH. My carry can be bought back at the current mark.
携带协议通常有三个选择：
Based on offers I have seen, some variation of a 5 year linear vesting schedule is fairly standard and what I would consider market. The partners at my current independent sponsor shop were generous to have everything vest day one at close of each deal, since "we want you to work here because you want to work here not because you have to."
Thanks! Very helpful. Sound like great people to work for.
Intellectually interesting to me: If vesting isnotput in place as "golden handcuffs" (which may be part of the "conventional setup"), seems like there's still a fair question about the appropriate time schedule. The fair-minded counter to the "100% at close" structure is that there's ongoing value creation work that takes place post-close. (On the other hand, even once fully vested, the upside does provide motivation / alignment to maximize the outcome -- so debatable whether vesting is needed to align interests.)
Arguably much of the deal-team value add is up-front (tied to sourcing, structuring, executing the deal). Obviously it varies, but any thoughts on the potential % of back-weighted vesting that is structurally justified to account for ongoing activities by the sponsor / deal team?
Sent you a pm
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