3: The future of private equity
Onward, a Fundrise Production
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The Compensation Structure for Private Equity Firms
In the nineties, private equity firms put in place a compensation structure for how they made money. The basic idea was that if you're really good at making profits, your relly good at basically generating returns upside, you should get a share of those profits. That was typically 20%. And that was true with the the private equity fund manager, and also the operator, the person on the ground. So yu're actually talking about two to three % assi mangement fees across that value chain, plus forty % of the profits.
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