RE #180: Chris Powers - GP Fees and The Pathway to Building a World-Class REPE Operating Platform
On this episode, Chris does a full deep dive into the world of fees, including what they are, should you be charging fees at all, and when, fee misconceptions, the benefits of a profitable company, and the pathway to building a world-class REPE...
On this episode, Chris does a full deep dive into the world of fees, including what they are, should you be charging fees at all, and when, fee misconceptions, the benefits of a profitable company, and the pathway to building a world-class REPE operating platform. Chris also answers your questions submitted on Twitter and much more!
Follow Chris on Twitter: www.Twitter.com/FortWorthChris
Learn more about Chris Powers and Fort Capital: www.FortCapitalLP.com
Follow Chris on LinkedIn: www.linkedin.com/in/chrispowersjr/
Follow Fort Capital on LinkedIn: www.linkedin.com/company/fort-capital/
(01:16) - Why Fees?
(02:45) - Misconceptions: GP’s Charging Fees and Making a Profit is Bad
(05:20) - Charging Market Fees and Getting Great Returns
(06:49) - What are the benefits of running a profitable company?
(10:05) - GP’s That Don’t Charge or Offer Reduced Fees are Hurting their OpCo in the Long-Run
(11:01) - The Difference Between OpCo’s and Assets
(13:18) - Understand Where Your Company is: Fee Structuring for Young Companies
(15:03) - How to Charge Fees and How to Talk About What’s Behind the Fees
(17:43) - How do we know what we can charge for and what we cannot?
(21:24) - Fort Capital’s Fee Strategy Early On
(23:35) - An Outline of How to Think About Fees and Example Scenarios
(30:27) - GP’s That Don’t Charge What They’re Worth
(31:25) - Ways to Think About What You Should Be Charging
(36:04) - Running Your Company as a Break-Even Business vs. a Profit-Generating Business
(37:53) - Specific Fees to Think About
(49:18) - Real Estate Private Equity: Fees Charged to Allocate Capital to GP’s vs. Fees Charged by GP’s Who Actually Operate
(50:47) - Charging the Right Structure of Fees for Your Business
(53:50) - Twitter Question: What’s an example of a deal you’ve done and how the fee dollars are allocated?
(59:00) - Third-Party Providers
(1:00:32) - Twitter Question: Can an established sponsor with capital charge an acquisition fee that’s equal to their contribution?
(1:04:16) - Twitter Question: How have Fort Capital’s fees changed over time?
(1:07:56) - Twitter Question: 3rd Party Management & Leasing vs. Vertically Integrating
(1:10:14) - Wrap Up
The FORT is produced by Johnny Peterson & Straight Up Podcasts