How do management fee waivers work?

[Management fee waivers as cashless contributions to the fund] Some fund managers choose to satisfy some or part of their GP commitment via the cashless contribution of their management fees from the fund, sometimes referred to as “waiving management fees.” There are important tax implications surrounding the decision to waive management fees as well as determining how much of the GP commitment to satisfy via this waiver. As such, interested fund managers may wish to speak to an accountant or other tax professional about their individual situation.

If a fund manager decides to fund part of the GP commitment via this cashless contribution of management fees, they should let their Venture Capital Associate know before the launch of the fund (or before the launch of the next quarterly fund), so that the decision can be adequately disclosed to the Limited Partners.

[Management fee waivers per LP] Fund managers can choose to waive management fees on an LP by LP basis. For Rolling Funds, all management fee waivers are confirmed at the end of the quarter and effectuated by giving the Limited Partner in question an additional nominal interest in the fund that corresponds to the waived management fee amount.

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