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Home / Glossary / Management company

Management company

The operating business that runs the funds — employer of the team and recipient of management fees. Allocators assess whether it can survive to the next fund.

Management company — The operating business that runs the funds — employer of the team and recipient of management fees. Allocators assess whether it can survive to the next fund.

Allocators assess whether the management company itself is financially viable — whether fee revenue at the proposed fund size actually covers the team, technology, compliance and overhead — because a firm that cannot sustain itself to the next fund is a real risk independent of investment performance.

Frequently asked questions

Is the management company the same as the fund?
No — the management company is the operating business that employs the team and runs the funds; the fund itself is a separate legal entity that holds the actual investments.
Why do allocators care about management company economics?
Because a firm whose fee revenue doesn't realistically cover its cost base is a going-concern risk to the fund's stability, independent of how good the investment strategy is.

Nothing on this page is legal, tax, or investment advice. SeRuM is not a registered broker-dealer, not a placement agent, and not an investment adviser.

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