The adviser must achieve a 7% annualized hurdle rate (1.75% quarterly) before earning any incentive fees.
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Private equity operators by definition pare overhead to achieve hurdle rate goals including employment rolls.
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Suppose you found out its hurdle rate--trading costs plus management fees and other expenses--was a high 5% .
Capella, for example, charges 1.5% a year in expenses and 20% of profits above a certain hurdle rate.
GPs will be unwilling to rush to sell those investments at a loss or below their carry hurdle rate.
Two of them offer probable price gains better than double our investment hurdle rate, and another 15 meet that minimum.
After the three years, any appreciation over the hurdle rate goes to your kids, free of estate and gift tax.
If the value of the trust assets increases by more than the hurdle rate, the GRAT will be economically successful.
"As economists have lowered and lowered their expectations for economic growth in 2012 it brings down the hurdle rate, " for positive surprises.
Then, by adding two known costs, the annual expense ratio and trading commissions, Barra computed what it calls a fund's hurdle rate.
So a low profit margin hurdle rate could be a competitive advantage for Japanese companies competing internationally, particularly if it were a choice.
Why, you may ask yourself, should a fund's hurdle rate matter?
If the fund can't earn back this hurdle rate plus the category benchmark average by clever stock selection (or reduce risk significantly), you shouldn't own it.
For instance, Siemens, a German industrial giant, last year started assigning a different hurdle rate to each of its 16 businesses, ranging from household appliances to medical equipment and semiconductors.
Areas where LPs say they have witnessed changes in the past year include adjustments to management fees, rebates on deal-related fees and to a lesser extent reductions in the hurdle rate and changes to the carry structure.
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But since the first dollar converted in 2012 will be taxed at the 33% rate, the hurdle for that first dollar is at least 17.9% appreciation by the time you need to decide if you want to keep it or unconvert (recharacterize) it.
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As if the unemployment rate weren't intimidating enough, young veterans face another hurdle: Many employers don't appreciate their experience.
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