How to Track Management Fee Offsets After You Close

How to track management fee offsets is the ledger you keep after the LPA is already signed: fee type, offset percent, offset applied, remaining management fee, and period. It is not a fee-offset explainer. Raziel's LP fee and carry tracking page is the cash-flow row (gross fee, net fee, Dist: Carry already taken). This page is the five offset columns behind that net number.

This is not legal, tax, or investment advice. Raziel does not provide it. Copy the signed LPA and the latest notice or capital-account pack. Do not invent a market offset percent.

What this ledger is (and is not)

ILPA's Principles 3.0 glossary defines Management Fee Offsets as the extent to which monitoring, transaction, and other fees charged directly to portfolio companies and paid to the GP are offset against management fees the LP pays the GP. The same glossary says typically 60 to 100 percent, with 100 percent preferred by LPs. That band illustrates the definition. It is not a market rate. Do not paste 80 percent into the row. The June 2019 best-practice line is sharper: no fees should be charged to portfolio companies, and any that are charged should be 100 percent offset against the management fee and subject to standard disclosure. Fees exempt from offset should be rare and clearly defined in the LPA.

Five columns on one fund row

Open one row per fund after close. Do not collapse two vehicles that share a GP brand. Copy each field from the LPA and the latest pack. If a field is missing, store that it was missing. Principles 3.0 tells LPs to check fee calculations, including offsets, against GP-reported numbers. A headline net fee on the call is not remaining management fee.

• Fee type. The category of Fee Income that created the offset. The ILPA Model LPA (whole of fund, July 2020) defines Fee Income as directors', transaction, monitoring, advisory, and other fees (excluding the Management Fee) received by the GP, manager, key persons, or affiliates. ILPA's Reporting Template labels Transaction and Deal Fee Offset, Directors Fee Offset, and Monitoring Fee Offset as separate lines. Copy the type from the notice.

• Offset percent. The share of that fee type that reduces the management fee under the LPA you signed. Principles 3.0 prefers 100 percent. The Model LPA applies 100 percent of Fee Income (each LP's pro rata share based on Commitment). Your percent is the clause, not a market default.

• Offset applied. Dollars actually used to reduce the management fee in this period. The Reporting Template's Offsets to Management Fees (Applied During Period) is the amount recognized management fees were reduced by during the period. Applied is not Fee Income received. The Model LPA will not take the installment below zero.

• Remaining management fee. Gross management fee for the period minus offset applied, floored at zero. ILPA's 2011 Capital Call and Distribution Notice Best Practices split Gross Management Fee (excluding offsets) from Net Management Fee (after offsets). Remaining is that net figure for the period. Date it.

• Period. The Payment Date the offset was applied to. The Model LPA pays the Management Fee in quarterly installments in advance. Offset is measured against Fee Income paid since the preceding Payment Date. Do not hang an offset on the deal close date if the LPA applies it on the next installment.

Offset percent is the LPA, not a market default

Copy the clause. If the LPA offsets 100 percent of monitoring fees and a different share of transaction fees, store two types with two percents. Do not average them. Principles 3.0: fees not subject to offset should be disclosed. Store "not subject to offset" as a type with a zero percent, plus the disclosed amount. The Model LPA has no haircut: each quarterly installment is reduced, but not below zero, by the LP's pro rata share of aggregate Fee Income paid since the preceding Payment Date. The term sheet adds that excess Fee Income rolls forward to reduce succeeding installments.

Applied this period is not leftover offset

Offset applied is the slice that cut this installment. Leftover Fee Income is the excess that could not be applied because the installment was already at zero. The Model LPA carries that excess to later Payment Dates. The updated Reporting Template keeps the same split: recognized offsets during the period may not equal the amount applied, and it keeps an Unapplied Offset Balance roll-forward. Post both. In-kind Fee Income has its own clock. Principles 3.0: offsets on fee income paid in-kind should use fair market value, or, if FMV is unavailable, offset as soon as the security becomes marketable or at the end of the fund's life, whichever is first. Do not apply a stock grant on the grant date if the LPA waits for cash proceeds.

When the ledger holds

The row holds if fee type is the LPA's (or the pack's labeled offset), offset percent is the LPA's, offset applied is dated to a Payment Date, remaining management fee is gross minus applied for that period (not below zero), and leftover unapplied offset is carried, not deleted. It fails when you paste 100 percent because Principles 3.0 prefers it, when you blend two types into one percent, or when leftover offset vanishes because the installment was already zero. Feed dated cash to an IRR calculator only after you know which dollars were gross fee, which were offset applied, and which were remaining. Raziel's alternative-asset dashboard is the investment record those rows can sit on: cash dates, documents, IRR and MOIC, AI ingest of the pack, capital calls, wallets and bank linking. Raziel does not run the offset math and does not give investment advice. Copy the five columns. Leave the LPA math to the agreement and the notice.