Catch-up Period
A Catch-up Period (also known as 'catch-up' or 'GP catch-up') is a common term in private equity that refers to the time when fund managers start receiving their share of profits after investors have received their initial investment back plus a minimum return. Think of it like a threshold that needs to be crossed - first, the investors get their money back with interest, and then the fund managers can "catch up" to get their share of the profits. It's similar to a commission structure where a minimum target needs to be met before bonuses kick in.
Examples in Resumes
Structured investment deals including Catch-up Period and hurdle rate calculations
Managed investor relations during Catch-up Period distributions
Developed financial models incorporating Catch-up Period and waterfall structures
Typical job title: "Private Equity Professionals"
Also try searching for:
Where to Find Private Equity Professionals
Professional Networks
Industry Resources
Example Interview Questions
Senior Level Questions
Q: How would you explain catch-up periods to potential investors?
Expected Answer: Should demonstrate ability to clearly explain complex concepts, using examples of how catch-up periods work in practice and why they're important for fund alignment.
Q: What factors influence the structure of catch-up periods?
Expected Answer: Should discuss market standards, investor expectations, fund size, and how catch-up periods relate to overall fund economics.
Mid Level Questions
Q: How do catch-up calculations work in a typical fund structure?
Expected Answer: Should be able to explain the basic math behind catch-up calculations and how they fit into the larger distribution waterfall.
Q: What are common issues that arise during catch-up periods?
Expected Answer: Should discuss timing of distributions, investor communications, and common calculation challenges.
Junior Level Questions
Q: What is the purpose of a catch-up period?
Expected Answer: Should explain that it helps align investor and manager interests by ensuring investors get their initial return before managers share in profits.
Q: What comes before and after the catch-up period in a typical distribution waterfall?
Expected Answer: Should understand the basic sequence: return of capital, preferred return, catch-up, then carried interest.
Experience Level Indicators
Junior (0-2 years)
- Basic understanding of private equity terms
- Financial modeling fundamentals
- Understanding of distribution waterfalls
- Excel and presentation skills
Mid (2-5 years)
- Detailed waterfall calculations
- Investor reporting
- Fund documentation review
- Deal structuring basics
Senior (5+ years)
- Complex fund structuring
- Investor negotiations
- Team management
- Strategic planning
Red Flags to Watch For
- Inability to explain basic waterfall concepts
- Lack of experience with financial modeling
- Poor understanding of investor relations
- No knowledge of industry standard terms
Related Terms
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