Give access to the management company

A formidable weapon to convince a potential investor is the opening of the capital of the management company or the carry incentive. The investor can expect very significant gains if the manager performs well. They will have their return as an investor and will benefit from the manager's exponential. Being in the management company would create a long-term relationship with the management company and its manager.

Managers often have to make decisions regarding the ownership and capital structure of their management company. One of the options they can consider is to offer an equity stake in the management company to an investor. This strategy can offer many advantages to the manager and his investors.

One of the main advantages of offering an equity stake in the management company to an investor is that it can provide long-term stability. By allowing an investor to have some equity in the management company, the investor is more likely to stick around as a partner and make long-term investments. He will open his network, share his skills and abound abundantly in capital. Its presence can be particularly beneficial in times of economic uncertainty, as the investor's stake in the management company can act as a buffer against market fluctuations.

Another advantage of offering management company participation to an investor is that it can provide access to additional capital. The management company is also a company. It must experience growth, go to new markets in investment, meet new investors… An investor who holds a stake in the management company may be more willing to provide additional funding when needed, which may be useful for management companies that need to invest in growth opportunities or acquire new assets.

Creating a strong relationship with an LP

A stake in the management company to an investor can also be used as a means of creating a relationship of trust between the company and its investors. By allowing an investor to participate in the capital of the company, it can create greater transparency between the two parties, which can foster a more collaborative relationship.

The manager can also give carry shares to his investors. By having carry shares, the investor will have a better financial return, but will not have any interest in the growth of the management company alone. These are two different strategies.

Greater return on investment

In addition to providing long-term stability and additional capital, offering an equity stake in the management company to an investor can also provide the investor with a direct return on their investment. The return for the investor over the long term will be more attractive by taking shares in the management company, whereas a carry incentive will be more profitable in the medium term.

Overall, offering a stake in the management company to an investor or to the carry can be a beneficial strategy for both the manager and his investors. It can provide long-term stability, access to additional capital, and a direct return on the LP's investment. It can also create goodwill between the company and its investors, helping to foster a more collaborative relationship.

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