Everyone knows the three standard pillars of independent sponsor economics (closing fee, management fee, carried interest).
How about an exit fee?
It's common in real estate. Without an exit fee, argues my good friend Edward Crawford 🇺🇸, independent sponsors have a disincentive to sell because they'd rather continue to collect sizeable fees to cover ongoing overhead/opex. Exit fees - still uncommon - are typically equal to 1 year's worth of management fees.
Note that you can't implement exit fees retroactively!
Check the new Minds Capital Podcast episode ("How to Build an Indy Sponsor Team Before Chasing Deals") which went live today.
