The End of Transaction Fees?
Tom Danis of RCP Advisers suggested yesterday that one reason Charlesbank Capital Partners had an oversubscribed fundraise was that the new vehicle’s terms gave 100% of transaction fees to limited partners (rather than a split). It wasn’t so much the expected dollars, Danis said, but more that Charlesbank was responding to what is broadly seen by LPs as a fairer alignment of interests. Handing 100% of transaction, portfolio monitoring and other fees is a key tenant of the ILPA guidelines proposed earlier this year. But here is my question: If most firms adopt the ILPA guidelines on fees, will that end the taking of fees? In other words, will GPs still have incentive to pilfer from portfolio companies if they can’t stuff any of it in their back pockets?
