WSJ: How Some Private-Equity Managers Collect Big Fees on Paper Gains
- The Wall Street Journal details how certain PE firms charge management fees on 'unrealized' portfolio markups, allowing managers to be paid on paper gains before any sale or distribution to LPs (https://www.wsj.com/finance/investing/how-some-private-equity-managers-collect-big-fees-on-paper-gains-2f449976?mod=rss_markets_main).
- The practice is gaining scrutiny as fundraising slows and GPs lean harder on fee-related earnings to hit targets, raising governance and conflict-of-interest questions for pension and endowment LPs.
- The story comes amid a broader LP push for transparency in private-market fees and could feed the SEC and Treasury's ongoing review of carried interest and performance-fee structures.