As a rough rule, the smaller and newer the firm, the more equal the partner economics.

As firms get bigger (>3 partners), it’s less and less likely carry (the profit from investments) is equal. At 8–10 partners, there is basically 0% chance partner economics are equal.

Age of the firm also matters too, as retiring and senior partners also take economics in funds even after they are less active. E.g., even if partners are “equal” in carry, if the firm has been around a while, it doesn’t mean the prior generation of partners don’t have economics in the fund. E.g., if there are 3 go-forward partners in a fund, and 3 that retired … in the next fund, the 3 go-forward partners could have equal carry between them, but the retired guy might also share 10 or 20 or 30% more of the carry as well.

And also, management company ownership (where the fees go, vs. the carry, the profits on investment) often are owned by a subset of the partners. So you can also have partners with equal carry, but only 1 or a subset of them own the management company that keeps all the fees (and really, makes all the decisions). So even equal carry doesn’t mean equal economics, necessarily.

In any event, partner performance is almost never equal. It’s a hits-driven business, and like in the movies, it’s really just a few guys that consistently produce hits. In bigger firms, it doesn’t make sense to me that profits should be equal then, either. In small firms, if you are all in it truly together, it makes more sense.


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