This article was published in The Journal of Private Equity (Vol. 22, Issue 3) Summer 2019. © 2019 Pageant Media Ltd. All Rights Reserved.
In 2018, 2016 and 2014, Private Funds Management (PFM) published surveys sponsored by Pepper Hamilton LLP, PEF Services and WithumSmith + Brown in which fund managers shared how they deal with fees and expenses. In addition, in 2015, Pepper Hamilton and MergerMarket partnered up to take a close look at the co-investment environment. These surveys offer unique insight into the granular approach that CFOs and CCOs must take to ensure the ordinary and extraordinary fees and expenses that occur in the life of a private equity fund are appropriately allocated to investors, co-investors and/or managers. In fund design, ongoing investor relations and regulatory review and enforcement, the fees and expenses borne by investment funds and co-investment vehicles are receiving more intense focus each year. The Institutional Limited Partners Association (ILPA) has adopted a comprehensive reporting procedure for fees and expenses. Based on the PFM surveys and anecdotal information from audience polls at conferences, adoption of the ILPA form has been slow, but is growing among middle market funds (sub-$1B) and has found a more favorable platform in larger funds.
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