Definition
Management Fee
An annual fee paid by LPs to the sponsor for ongoing administration of the SPV.
A management fee is an annual fee charged to LPs to cover the sponsor's ongoing operational costs — administration, reporting, K-1 preparation, and time spent monitoring the investment. SPV management fees commonly run 1-2% of committed capital per year, often paid as a prepaid lump sum at close (e.g. 5-10 years prepaid). Unlike fund management fees, SPV management fees are usually capped and disclosed upfront. They are separate from carry and from one-time formation costs.