Management fee offset
A contractually specified portion of eligible portfolio-company fees that reduces a fund’s management fee. Eligible fees, the offset rate and application rules depend on the fund agreement.
Management fee offset in round numbers
Hypothetical annual amounts: US$0.3m of eligible fees × a 100% offset rate = a US$0.3m reduction in that year’s management fee. Assume allocation rules, caps and carryforwards do not limit application and the management fee is sufficient to absorb it. The offset is a fee reduction, not necessarily a direct cash payment to investors.
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| Measure | Calculation |
|---|---|
| Eligible fees | 0.3 |
| Contractual offset rate | 100% |
| Management-fee reduction | 0.3 × 100% = 0.3 |
| Implied offset rate | 0.3 reduction ÷ 0.3 eligible fees = 100% |
Terms Related to Management fee offset
Management incentive plan (MIP) · 2-and-20 · GP · LPA · All of the glossary