Carried Interest (“carry”)

Carried interest, or carry, is the manager’s contractual share of fund profits, often 20%, paid after the distribution conditions in the limited partnership agreement (LPA) are met. When it’s paid depends on the fund’s waterfall, any hurdle, and clawback terms.

Example: If a fund invests $50 million and realizes $200 million, a simplified whole-fund waterfall that returns capital first and pays 20% carry on the $150 million profit gives the manager $30 million of carry. Actual distributions depend on the LPA, expenses, and timing.