# Management Fee

The **management fee** is a periodic fee paid by LPs to the GP to cover the fund's operating costs — salaries, legal, compliance, travel, and due diligence expenses. It is the GP's base compensation, paid regardless of fund performance, and is distinct from [carried interest](/waterfall-and-distributions/carried-interest.md), which is the GP's performance-based upside.

## Standard Terms

* **Rate**: 2.0% per annum is the industry standard for buyout and growth equity funds. Rates of 1.5%–2.5% are common depending on fund size and strategy.
* **Basis**: the percentage is applied to one of three bases depending on the fund's current phase.
* **Frequency**: called quarterly or semi-annually via a capital call.

## Fee Basis by Phase

| Fund phase             | Typical basis           | Why                                                  |
| ---------------------- | ----------------------- | ---------------------------------------------------- |
| Investment period      | Committed capital       | GP actively deploying; fee based on total obligation |
| Post-investment period | Invested capital or NAV | Deployment done; fee scales with remaining portfolio |

The switch from committed-capital to invested-capital basis is a [fee step-down](/fees/step-down.md) event, typically triggered at the end of the investment period. Some LPAs allow additional step-downs later.

## Calculation

```
Quarterly management fee = Committed capital × Annual rate × (1/4)

Example:
  LP commitment: €10,000,000
  Annual rate: 2.0%
  Quarterly fee: €10,000,000 × 2.0% × 0.25 = €50,000
```

After a step-down to invested capital at 1.5%:

```
Quarterly fee = €7,000,000 (invested) × 1.5% × 0.25 = €26,250
```

## Fee Offsets

The LPA may require the GP to credit third-party fees earned from portfolio companies — [deal fees](/fees/deal-fee.md), [transaction fees](/fees/transaction-fee.md), monitoring fees — against the management fee owed by LPs. See [Fee Offset](/fees/fee-offset.md) for the credit mechanics.

## Fee Waivers

Some LPs negotiate a partial or full management fee waiver in their side letter — typically first-close LPs or very large anchor investors. Gildi stores the waiver terms per LP and applies them automatically when generating each fee call.

## How Gildi Computes and Calls Management Fees

Gildi computes each LP's fee at the configured frequency using the current fee basis and rate for that LP (accounting for any waiver). The fee is included as a line item in the capital call, alongside any investment capital being drawn. The fee allocation follows the same pro-rata commitment logic as investment capital calls.

For the full calculation methodology including step-down rules and offset application, see the [fees methodology](/methodology/_fees.md).


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