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Chart of the Week: How Popular Are Management Fee Waivers?

Private equity professionals use the strategy so that they can pay the capital-gains rate of 15 percent on those waived fees, on the theory that they’re being put at risk, instead of income tax rates that can be as high as 35 percent. According to our PE/VC Partnership Agreement Study 2012-2013, 20 percent of North American buyout shops used the strategy on their latest fund, as did 10.5 percent of the international buyout firms in the sample.