SAN FRANCISCO, Aug. 27, 2024 -- Callan, a leading institutional investment consulting firm, announced today the release of its 2024 Private Equity Fees and Terms Study, which analyzes 413 private equity partnerships. Now in its third edition, the study helps institutional investors better evaluate private equity funds and serves as an industry benchmark when comparing a partnership's terms to its peers. The study can also be useful for general partners to determine how their fees and terms compare to other managers.
"With each year, the study's dataset broadens, and we now include a variety of general partners and strategy types," said author Ashley Kahn, CAIA, senior vice president in Callan's Alternatives Consulting group. "The growing size of the dataset becomes more representative of the broader private equity industry. With data now stretching back seven vintage years, we have a greater ability to see trends in fees over time."
What's New:
- The study now relies on Callan's proprietary database application, CallanDNA, as the source for private equity fee data. The shift from manual data collection to CallanDNA has broadened the dataset, enabling Callan to include data submitted by managers through its online questionnaire. As a result, the analysis focuses on trends by vintage year, rather than the year Callan reviewed each fund.
- Fund-of-funds and secondaries funds are now included, which serves as a helpful benchmark for these types of strategies.
Key Findings:
- The majority of funds had an American waterfall (54%), with almost one-third having a European waterfall, and a few maintaining a hybrid version of the two.
- The most prevalent carried interest percentage was 20% (90% of funds), while some (typically venture capital) charged carried interest as high as 25% or 30%.
- The median management fee during the investment period was consistently 1.75% to 2.00% year to year, but this can vary widely depending on the strategy type.
- The average management fee dropped from 1.96% to 1.72% after the investment period, and the median fell from 2.00% to 1.80%.
- The average general partner (GP) commitment was 3.6%, representing a drop from 4.2% noted in last year's study—likely due to the study including more venture capital funds, which tend to have lower GP commitments.
Find the summary blog post and study here.
About Callan
Callan was founded as an employee-owned investment consulting firm in 1973. Ever since, we have empowered institutional clients with creative, customized investment solutions backed by proprietary research, exclusive data, and ongoing education. Today, Callan advises clients with more than $3 trillion in total assets, which makes it among the largest independently owned investment consulting firms in the U.S. Callan uses a client-focused consulting model to serve pension and defined contribution plan sponsors, endowments, foundations, independent investment advisers, investment managers, and other asset owners. Callan has six offices throughout the U.S. Learn more at callan.com.
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