Understanding the cost structure and fee models used by private equity placement agents
When engaging a placement agent for private equity fundraising, understanding fee structures is essential. This guide covers typical placement agent fees in private equity, including retainers, success fees, and factors that influence pricing.
Private equity placement agent fees typically consist of two components: an upfront retainer and a success-based fee tied to capital raised. Fee structures vary based on fund size, strategy, and the placement agent's track record.
| Fee Component | Typical Range | Notes |
|---|---|---|
| Retainer Fee | $25,000 - $100,000 | Monthly or quarterly; covers operational costs |
| Success Fee | 1.0% - 2.0% | Percentage of capital raised from agent-sourced LPs |
| Tail Period | 12 - 24 months | Fee protection for leads generated during engagement |
Market Benchmark: For funds under $500M, success fees typically range from 1.5-2.0%. Larger funds ($1B+) often negotiate fees of 1.0-1.5% due to economies of scale and competitive dynamics.
Placement agent fees typically scale inversely with fund size:
| Fund Size | Success Fee Range | Retainer |
|---|---|---|
| Under $250M | 1.75% - 2.0% | $25,000 - $50,000 |
| $250M - $500M | 1.5% - 1.75% | $50,000 - $75,000 |
| $500M - $1B | 1.25% - 1.5% | $75,000 - $100,000 |
| Over $1B | 1.0% - 1.25% | Negotiated |
Several factors influence fee negotiations:
While fees represent a meaningful cost, successful placement agents often deliver significant value through faster closes, access to hard-to-reach LPs, market intelligence, and strategic positioning advice. The key is ensuring alignment between the agent's capabilities and your fund's specific needs.
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