# Transaction Fee

A **transaction fee** is a fee the GP earns when a portfolio company completes a significant corporate event after the initial investment — an add-on acquisition, a refinancing, a dividend recapitalization, or (in some structures) a sale. The GP acts as advisor or arranger and charges the portfolio company for the service.

## How Transaction Fees Differ from Deal Fees

|           | [Deal Fee](/fees/deal-fee.md)   | Transaction Fee                             |
| --------- | ------------------------------- | ------------------------------------------- |
| When      | At initial investment close     | Post-investment, on a later corporate event |
| What      | Advisory / structuring at entry | Advisory / arranging on M\&A, refi, recap   |
| Frequency | Once per investment             | Multiple times over a hold period           |

Both fee types are earned by the GP entity, not by the fund, and both are subject to the LPA's management-fee offset provision.

## Management Fee Offset

Like deal fees, transaction fees accumulate in Gildi's fee-offset ledger and reduce the next management fee call by the configured offset percentage. See [Fee Offset](/fees/fee-offset.md) for the full credit mechanics.

```
Transaction fee received: €300,000
Offset percentage: 80%
Credit applied to next fee call: €240,000
GP retains: €60,000
```

## Common Transaction Events

* **Add-on acquisition** — portfolio company acquires another business; GP earns an arrangement or advisory fee.
* **Refinancing** — portfolio company refinances its debt; GP earns an arranging fee.
* **Dividend recapitalization** — portfolio company takes on debt and pays a special dividend; GP earns an advisory fee.
* **Exit preparation / sell-side advisory** — in some fund structures, the GP charges a sell-side fee at exit.

Not all LPAs include sell-side advisory fees in the offset pool; the LPA specifies which fee types are included.

## LP Disclosure

ILPA's Fee Transparency Template recommends GPs disclose all transaction fees earned from portfolio companies on an annual basis, showing the gross fee and the offset credit applied. Gildi exports this data in the ILPA format for inclusion in annual reports.

## How Gildi Records Transaction Fees

Transaction fees are entered in Gildi against the relevant portfolio company record. Gildi:

1. Logs the fee amount, event type, and date in the fee-offset ledger.
2. Applies the offset percentage to compute the LP credit.
3. Adds the credit to the running offset balance.
4. Generates an entry in the annual fee disclosure export.

For the full offset calculation methodology, see the [fees methodology](/methodology/_fees.md).


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