Michael Woolhouse

to the extent that they have the ability to continue to own them for longer, will take advantage of that.

Again, with this narrow set of very special businesses.

The second thing is, we talked about the quantum of GP commit here.

The continuation vehicles can be very large and very large relative to the original investment.

That's five times the money.

Sometimes they're also able to buy out a co-investor or another minority investor.

So the continuation vehicles relative to the original investment can actually get quite large.

And then as you think about putting an economic package around a large continuation vehicle, larger than the original deal, the economic incentives, when they are successful, are commensurately large.

The typical incentive structure in continuation vehicles, single asset continuation vehicles is a management fee between 50 and 70 basis points.

And that might compare to one and a half to maybe 2% in the regular private equity market.

So it's lower.

And then the carry structure is very bespoke.

Everyone will know of, you know,

20 over eight in the regular way buyout business.

In this market, you tend to have what we call a tiered carry structure where the sponsor starts earning a 10% carry over an 8% preferred return.

Then they can earn their way into generating a 15% carry after delivering one and a half times the money in a 15% net to CB investors.

And then they can get back to parity and earn 20% carry after delivering two times the money and a 20% net to investors.

So to that end, there is some inherent downside protection, at least in the carry structure, which sponsors sign up to.

That's a nice positive buy signal when you think about it, because that tells you they think they can get to the high end.

They think they can deliver the high end of the return and get a 20% carry.