Offered 20% of the promote to be the asset management leg of a co-GP. Trying to price my own labor.
A sponsor I've managed for over four years wants me inside the GP on his next one, a 112 unit two-property portfolio, 9.1M all in, 3.2M equity. My side would be asset management: budgets, the capital plan, weekly reporting to LPs, and standing between him and my own management company.
What's on the table: 20% of the promote, no co-invest required, and my company keeps the property management contract at 3.5% plus the usual leasing and construction oversight fees. He keeps the acquisition and disposition fees and 80% of the promote, and he signs the loan.
My problems with it, in order.
The promote share doesn't vest against anything. If I do three years of asset management and he sells in year four after replacing my management company, the draft seems to say I still hold the 20% because it's an equity interest in the GP entity, but the draft also has a forfeiture clause tied to "cessation of active involvement." Those two things fight each other.
Then the conflict. I'd be the asset manager reviewing the performance of my own management company, and the LPs will see that in the documents. I'd rather it be disclosed loudly and priced than buried.
And the actual money. Best case here, deal works, promote pool might be 700k, my 20% is 140k over five years. My management contract on 112 units at maybe 950 average is roughly 45k a year of revenue, of which maybe 12k is margin. So I'm taking on GP-level exposure to reporting and decisions for something like 28k a year of upside.
The decision in front of me is whether to ask for a flat asset management fee of 0.5% of equity annually on top of the promote share, or to ask for 30% of the promote with a vesting schedule instead. I can't ask for both without sounding like I'm renegotiating a favor.