Sliding fee scale is a fee as a percentage of assets that increases or decreases over the life of a partnership. Investment firms commonly receive fees that decline as a percentage of assets as the managed asset size increases or a certain time period has past. In addition, investment firms can receive performance or success fees that increase as a percentage of assets as set targets are reached.
Examples of declining fees are investment banks that charge a finder or capital raise fee as a percentage of assets that decreases as the size of the assets purchased or sold increases. An another example would be private equity firms that charge management fees as a percentage of total committed capital, and later scale down this fee after the investment period has ended to reflect the reduced due diligence and transactions done by the general partner. A third example would be a fund of funds that charge investment management fees that decreases as a percentage of assets as the size of the assets invested increases.
Examples of increased fees are hedge fund managers who receive an incentive or performance fee that increases as a percentage of assets as certain return thresholds are met. Another example would be an investment bank that receives a success fee as a percentage of assets that increases if top dollar for assets sales are attained.
Examples of declining fees are investment banks that charge a finder or capital raise fee as a percentage of assets that decreases as the size of the assets purchased or sold increases. An another example would be private equity firms that charge management fees as a percentage of total committed capital, and later scale down this fee after the investment period has ended to reflect the reduced due diligence and transactions done by the general partner. A third example would be a fund of funds that charge investment management fees that decreases as a percentage of assets as the size of the assets invested increases.
Examples of increased fees are hedge fund managers who receive an incentive or performance fee that increases as a percentage of assets as certain return thresholds are met. Another example would be an investment bank that receives a success fee as a percentage of assets that increases if top dollar for assets sales are attained.
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| Sliding Fee Scale |
