What are typical structures for private equity fund management fees?

The typical structures for private equity fund management fees include management fees and carried interest. Management fees are usually charged as a percentage of committed capital or assets under management and are intended to cover the operational costs of managing the fund. This fee is typically charged annually during the fund's life.

Carried interest, on the other hand, is a performance-based fee that allows fund managers to share in the profits of the investment after a certain return threshold has been achieved. It incentivizes the fund managers to perform well, as they only receive this portion of the profits if the fund exceeds a specific return.

This dual structure aligns the interests of the fund managers with those of the investors, encouraging managers to maximize fund performance. The combination of management fees and carried interest is a standard approach in the private equity industry, reflecting the dual roles that fund managers play in both operating the fund and generating returns for investors.