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What does "carry" mean in this context?
by cauterized 10y ago
What does "carry" mean in this context?
- stagbeetle 10y agoBasically a percentage of the profits from sales.
- cauterized 10y agoThanks!
- bkohlmann 10y agoMore exactly, "carry" is the negotiated profit from a deal above a certain "hurdle." For instance, in the traditional 2 and 20 Model in Private equity, general partners get an annual fee of 2% of assets under management. But the 20 is the real moneymaker...they get 20 percent of any profits from the overall gain in the fund. If the fund makes, say, an annualized 15 percent, and the min return to investors I. 8%, the investor gets 20% of the 7% (15-8) profit. And over a 5-7 year fund life, that's a compound number. It leads to immense upside.
- cauterized 10y agoThat is insane!