Fellow Searchers,
I am wondering what is the typical inventive structure for Operators/GPs for a fund with roll-up business model (meaning many smaller acquisitions for economies of scale instead of 1 searched company).
I am especially interested in answering those questions:
1. Is there any typical incentive/payout structure in roll-up model like in stricte search fund model?
2. What is probable equity range?
3. Is there any profit sharing or/and management fee? (like one could observe in PE funds)
Thanks in advance!
Payout benchmarks for Operators/GPs in a roll-up model
by a searcher from Warsaw School of Economics
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A classic roll-up fund (typically one platform + add-on's) is a typical PE fund structure of 2-and-20. 2% mgmt fee of AUM and 20% carry. If possible, you can also negotiate a 30% carry after 3x or 4x, etc.
Another less typical structure (network of smaller acquisitions) is for you to find one anchor sponsor for a holding company where you as the management of that holding company get paid a salary (in lieu of mgmt fee) and 15% of equity in that holding company, which in most economic payout scenarios, works out to be about the same when compared to carry.