TLDR:
- Callan released its 2024 Private Equity Fees and Terms Study analyzing 413 partnerships.
- The study expands datasets and includes new fund types for better comparison across key metrics.
Callan, a prominent institutional investment consulting firm, unveiled its 2024 Private Equity Fees and Terms Study, offering insights into 413 private equity partnerships. The study, now in its third edition, aims to assist institutional investors in evaluating private equity funds, providing a benchmark for partnership terms compared to industry peers. The study, authored by Ashley Kahn, senior vice president in Callan’s Alternatives Consulting group, boasts a larger and more representative dataset that has grown over the years, allowing for a better understanding of trends in fees over time.
The study introduces new features like relying on Callan’s proprietary database application, Callan DNA, for private equity fee data. The shift from manual data collection to Callan DNA has widened the dataset, leading to the inclusion of data from managers through an online questionnaire. Additionally, the study now encompasses fund-of-funds and secondaries funds, offering a comparative benchmark for these strategy types.
Key findings from the study reveal that the majority of funds had an American waterfall structure, while carried interest percentages ranged around 20% with some exceptions, typically in venture capital. The management fee during the investment period varied depending on the strategy type, with a median of 1.75% to 2.00% consistently year over year. The study also noted a drop in the average management fee from 1.96% to 1.72% post-investment period. Furthermore, the average general partner (GP) commitment decreased to 3.6% compared to the previous year’s study, likely due to the inclusion of more venture capital funds that typically have lower GP commitments.
The insights and analysis provided in the study can be valuable for general partners looking to evaluate their fee structures and terms in comparison to industry standards. For more information and to access the full study, visit Callan’s official website.
